Forex Daily Wrap: May 7, 2015

Overview
The USD-index initially trended lower earlier in today’s sessions continuing the downward trend following yesterday’s weak ADP Employment figures, only to reverse course after finding support at the 0.0% fibonacci at 93.88 to sit comfortably above the 94.00 handle. Strong USD data in the form of US Initial Jobless Claims (May 2) W/W 265K vs. Exp. 278K also supported the resurgence of the greenback. Elsewhere, political uncertainty continued to drag GBP/USD lower as the pair retested the 61.8% fibonacci at 1.5166 with the final polls unable to declare an outright winner ahead of the announcement of the election results tomorrow.

Separately, EUR/USD initially traded higher after favourable yields in Bunds supported the pair, however the resurgence of the USD halted the EUR’s upside. Moreover, Bunds reversed course in a 200 tick swing which subsequently resulted in EUR/USD to close the session down over a point whilst also breaking below its 100DMA at 1.1249 with mixed signals coming from the Greek negotiations as German Finance Minister Schaeuble stated that he does not expect much from the Eurogroup meeting on the 11th March, despite upbeat comments from Greek officials suggesting that a resolution could come to fruition in the coming days.

Overnight, AUD was the session’s biggest mover in the wake of a mixed AU employment report, which despite falling short of analyst expectation, saw favourable revisions (-2.9k vs. Exp. 4.0k (Prev. 37.7k, Rev. 48.1k). As such, AUD/USD whipsawed initially falling on the headline reading before surging higher following the revisions. The pair later extended on gains to break above 0.8000, as the Australian 10yr yield broke above 3.0% for the first time since Dec’14. However, the commodity linked currency was unable to hold onto its gains after the USD-index staged a comeback at the back end of the European session.

Looking ahead, tomorrow sees the release of Non-Farm Payrolls with a majority of analysts expecting a bounce back from last month’s disappointing reading of 126K and the Fed attributing the slew lacklustre data on ‘transitory factors’. Moreover, the tomorrow’s calendar provides US Employment, Average Hourly Earnings, Canadian Unemployment Rate, ECB’s Liikanen, ECB’s Constancio, Fed’s Dudley and SNB President Jordan