The US have just posted its worst employment report in over a year, with the US economy adding just 126K new jobs in March, and with strong downward revisions to the two previous months. The unemployment rate remained steady at 5.5%, whilst wages ticked higher, with average hourly earnings up by 0.3% monthly basis, but it was not enough to overshadow the terrible headline that clearly signals a slowdown in the US recovery's momentum during the Q1, particularly considering data has been weak, to say the least, all through March. The highest jobs cut came from the oil industry, something that does not came as a surprise, as falling worldwide demand and prices are finally taking their tolls.
The dollar's collapse may extend into next week, as investors are now considering a rate hike is highly unlikely for June, and even hopes diminished towards a September move. But could the EUR run further? The pair is still shy of its recent highs in the 1.1050 region, as Greek woes weigh on the common currency.
Greece has submitted a list of reforms, but the rest of the EU is yet to approve it. In the meantime, the country is say to run out of cash next week, when it will also have to face a payment of 448M euros to the IMF. The EU may then have to release additional funds to Greece, before a deal is done, or let the country default. Despite this last chance seems pretty unlikely at this point, it may generate a strong risk aversion among investors, and keep the EUR subdue.
Bottom line, dollar weakness is set to prevail, but that does not automatically means EUR strength.
Most of the major markets will remain closed on Monday on Easter Holiday, which means the trading desk will be working back in full mode only next Tuesday, and the echoes of Friday's employment release may extend until then.
Anyway, next week's calendar will be fulfilled with critical macroeconomic data that from all around the world, and here are the most relevant ones:
Monday
USD Markit Services and Composite PMIs: measuring US services and manufacturing private sectors, the US can really use some up beating data after today's figure. Services PMI is expected to remain unchanged at 58.6 at the time being. The country will also release its ISM manufacturing PMI, expected at 56.5 from previous 56.9. If the readings don't match expectations, the USD dollar will likely extend its decline despite the holiday.
Tuesday
AUD: RBA Monetary Policy meeting: for over a month, the market has been speculating the RBA will cut rates further after the February cut that left the main benchmark at 2.25%. The Aussie traded as low as 0.7532 against the greenback this week, levels not seen since May 2009, as investors have already priced in a rate cut, due to plunging metal prices. That's why despite dollar sell-off the AUD/USD bounce has been quite shallow. The market reaction therefore will likely be stronger if the Central Bank remains on hold, than if it actually cuts rates.
Wednesday
USD FOMC Minutes: The FED is unlikely to shed more light on the upcoming rate hike, but does not mean the market with scrutiny every single word of the statement. I can't see how the Minutes may help the greenback following a dovish meeting that included downgraded forecasts, and a poor employment report.
Thursday
GBP: BOE Monetary Policy meeting: the Central Bank is expected to maintain its policy unchanged ahead of May elections, and the meeting will likely become a non-event, although a surprise can't be discarded when it comes to a Central Bank meeting.
Friday
CNY: Consumer Price Index: China has not been immune to worldwide deflationary issues, albeit February readings resulted above expected, easing concerns partially. Nevertheless, the local Central Bank has been taking further steps to boost the economy, which means risk of falling into a deflationary inflation are still pending over the country. If the reading misses expectations, it will likely weigh over the rest of the Asian currencies, and give the greenback a temporal breath.
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