Market Drivers April 19, 2018
Europe and Asia
AUD: Employment 4.9K vs. 20K
GBP: UK Retail Sales -1.2% vs. -0.5%
North America
USD: Weekly Jobless 8:30
It was a seesaw night for FX with majors trading in relatively wide 50 point ranges with reversals rather than continuation being the theme of the day.
In Australia the labor data missed its mark printing at 4.9K versus 20K eyed while the month prior figures were revised lower to -6.3K from 17.5K. This ended the run of sixteen consecutive months of job gains Down Under.
The net takeaway from Aussie data was that the labor demand remains positive but is far more muted than the pace in 2017 which will only confirm RBA decidedly neutral stance as the central bank will remain on hold very likely for the rest of the year. Aussie initially dropped on the news but recovered to trade back towards the .7800 figure. The pair remains contained in the .7700-.7800 zone but may be getting some help this week from adjustments in AUD/NZD and AUD/CAD flows. With all the comm dollar central banks on hold for the foreseeable future, the Aussie no longer seems to be the obvious relative weakness trade.
Meanwhile, in UK the Retail Sales report came in much worse than forecast at -1.2% versus -0.5% with analysts blaming the weakness on cold weather. Still, this is the third data point this week that shows UK economy clearly decelerating. With lower than expected inflation data, weaker consumer demand and smaller than forecast gains in average earnings, it’s hard to see how BoE could make a strong case for tightening. Nevertheless, the market is still pricing in an 81% rate chance of a hike which suggests that most traders believe that BoE is committed to at least starting the normalization process. Cable fell to 1.4160 but quickly recovered and looks ready to retake the 1.4200 level as the long side bias dominates trade in the pair.
In North America the calendar is barren with only weekly jobless claims on the docket, so consolidation may be the order of the day. The dollar appears to have found support at the 107.00 level against the yen and if risk flows and yields cooperate, dollar bulls make take another run at the 108.00 level which has been key resistance for nearly 2 months.