AUD extended gains amid surprise jobs report, US jobs data in focus

Market Brief

As expected the ECB meeting yesterday was indeed a non-event. Even the protester, who disturbed the press conference, didn’t manage to wake traders up. As a result, EUR/USD traded range-bound during the US session. US Industrial Production was released below expectation to -0.6% verse -0.3% expected, while the Empire Manufacturing missed widely expectations as it came in at -1.19 verse 7.17 expected. In Canada, the Loonie appreciated sharply as high as CAD 1.2251 for 1 dollar after the BoC decided to maintain interest rate unchanged at 0.75%, even though the “Canadian Economy is estimated to have stalled in the first quarter”. However the Bank expect the impact of oil shock on growth to dissipate as real GDP should grow by 1.9% in 2015. In Tokyo, USD/CAD erased previous gains and is currently trading around 1.23.

During the Asian session, the employment numbers from Australia surprised traders as the economy managed to create 37,700 jobs in March while the market expected an increase of only 15,000 jobs. As a result the AUD jumped as high as 0.7782 Aussie for 1 dollar and gained more than 1% against the Yen. Unemployment rate therefore came in at 6.1% verse 6.3% expected. This strong jobs report may challenge potential rate hike in May by the RBA, future economic data reads will be highly watched. On the equity side, the ASX 200 jumped instantly by 1.05% to 5,970 before consolidating slightly lower. In China, the Shanghai Comp is up more than 2%, the Nikkei is flat while the Hang Seng edge up by 0.10%.

Crude oil is on fire as WTI reached $56 a barrel while its counterpart from the North Sea was up more than 6.5% after data showed US crude oil inventories grew by 1,294K barrel verse 3,540K expected, their slowest pace since January. In total US crude oil inventories are at the highest level this year at 483.7mn barrels.

GBP/USD finally broke the 1.48 resistance (multiple low and Fib 23.6% on Feb-Mar sell-off) to trade higher up to 1.4880. The sterling is currently heading back and will try to convert this level into a support. On the upside, the next key resistance stands at 1.50 (multiple high and psychological level); the pair will need fresh boost to break that resistance and it may come from the US this afternoon as the Initial Jobless Claims and Housing Starts are due, a lower read could send the sterling higher. On the downside, a strong resistance stands at 1.4566 (low from April 13).

EUR/USD finally broke the 1.0685 resistance (Fib 38.2% on March rally) and tested the next one at 1.0755 (Fib 50%). However the euro didn’t find the strength to stay above as the single currency is now trading around 1.0665. It will be a quiet day in Europe vis-à-vis the lack of economic data, on the other hand it will be a busy day in the US with the release of the Housing Starts, Initial Jobless Claims, Bloomberg Consumer Comfort and Economic Expectations and Philadelphia Fed Business Outlook. We may face some erratic movements this afternoon.