Forex Today: Risk-on mood to keep hurting the greenback

What you need to know on Monday, May 8th:

 On Friday, the US Nonfarm Payroll report boosted the optimistic sentiment, as the country added 2.5 million jobs in May, against expectations of -8 million. The unemployment rate surged to 13.3%, much better than the 19.8% expected while the Labor Force Participation Rate increased to 60.8%. The dollar gained only against high-yielding rivals, as Wall Street soared. The US three major indexes added over 2.0% each, to settle at multi-month highs.

Over the weekend, China released the June Trade Balance, which posted a surplus of 62.9 billion in dollar terms, widely beating expectations and a record high. Exports fell a less-than-expected 3.3% YoY, but imports plunged 16.7%, as a result of coronavirus-related lockdowns. The encouraging numbers should favour risk appetite at the weekly opening.

AstraZeneca Plc has made a preliminary approach to rival drugmaker Gilead Sciences Inc. about a potential merger, according to people familiar with the matter, in what would be the biggest health-care deal on record, according to Bloomberg. Both companies are running to beat COVID-19, and the news should further underpin the market’s optimistic outlook.

The coronavirus pandemic is not over, although Europe continues to deescalate restrictive measures with a drastic decrease of new cases suggesting the area may be able to avoid a second wave. In the US, reopenings are also taking place, although the situation is uneven, with cases still rising in some states.

Protests in the US continue, although things seem to have cooled down. New York’s Mayor Bill de Blasio announced the early end of  curfew after peaceful protests Saturday.

Those currencies considered high-yielding such as EUR, GBP, AUD and CAD retreated from multi-week highs post NFP against the greenback, but closed the week with substantial gains, suggesting the movements were corrective.  The Japanese yen and the Swiss Franc, however, fell to fresh weekly lows against the greenback.

Gold prices plunged, with spot gold ending the week at $1,685 a troy ounce. Investors continued to unwind longs in benefit of high-yielding rivals. Anyway, continued stimulus from central banks should keep the metal supported in the longer-term.

Crude oil prices rallied on Friday, with WTI adding over 5% and settling above $39.00 a barrel, amid hopes of an OPEC+ extension of its output cut agreement. On Saturday, the nations agreed to extend a production cut of roughly 10 million bpd through the end of July.

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