Top Stories
- EZ PMI Services declines further
- EZ Retail Sale bit better than eyed
- Nikkei closed, Europe of -0.77%
- Oil at $102/bbl
- Gold at $1628/oz.
Overnight Eco
- EUR Euro-Zone Purchasing Manager Index Services (APR F) 46.9
vs. 47.3
- EUR Euro-Zone Retail Sales (MoM) (
MAR
) 0.3% vs. 0.1%
Event Risk on Tap
- USD Change in Non-farm Payrolls (APR) expected at 165K
- USD Unemployment Rate (APR) expected at 8.2%
- USD Average Hourly Earning All Employees (MoM) (APR) expected
at 0.2%
- CAD Ivey Purchasing Managers Index s.a. (APR) expected at
60.8
Price Action
- USD/JPY slips towards 80.00 ahead of NFP
- AUD/USD risk aversion pushes it below 1.0250
- GBP/USD quite at 1.6170
- EUR/USD weak PMI sends it to 1.3130
Currencies were in their typical pre-NFP stall in quiet European
trade with liquidity further hampered by the fact that today was
the end of Golden Week holidays in Asia. Nevertheless mild risk
aversion flows continued to weigh on the euro in the wake further
evidence of deterioration of economic conditions in the Eurozone.
Final EZ PMI services printed even worse than the original flash
estimate at 46.9 versus 47.9 putting further downward pressure on
the euro at the start of morning European trade. The downturn in
services was the largest drop since October of 2008 during the peak
of the credit crisis and suggests that economic conditions in the
monetary union are deteriorating rapidly.
The subcomponents of the report were also negative with
employment decreasing to 48.3 from 48.5 initial reading. The news
may put additional pressure on the ECB to provide more monetary
easing despite the fact that ECN President Draghi ruled out any
immediate initiatives in yesterday's monthly press conference.
The EUR/USD slipped lower in response to the news dropping to
1.3125 from 1.3150 at the start of Asian trade. Currencies remain
listless and are unlikely to move much before the US payroll
number, but given the preponderance of negative newsflow the euro
may be vulnerable to further selloff if the US data misses
expectations.
Yesterday's ISM Services report which tends to be a one of the
better forecasters of the broader NFP number showed that the
employment gauge slipped to 54.2 from 56.7 in March. Such a large
drop does not bode well for today's report suggesting that the NFP
may print closer to 125K rather than 200K. The market anticipates a
reading of 173K and if the number misses it is likely to weigh
heavy on investor sentiment as this will be the second consecutive
month of sub-par labor market growth indicating that the US economy
is in a stall.
USD/JPY has been flirting with the 80.00 this whole week and a
markedly weak number will likely send the pair below that key
psychological level despite any efforts by the Japanese authorities
to prop up the pair. A weak number is also likely to weigh on risk
FX with EUR/USD possible testing the 1.3000 figure and Aussie
slipping all the way to 1.0100 as investor sentiment turns
decidedly sour.
FX Upcoming
| Currency |
GMT |
EST |
Release |
Expected |
Prior |
| USD |
12:30 |
8:30 |
Change in Non-farm Payrolls (APR) |
165K |
120K |
| USD |
12:30 |
8:30 |
Unemployment Rate (APR) |
8.2% |
8.2% |
| USD |
12:30 |
8:30 |
Average Hourly Earning All Employees (MoM) (APR) |
0.2% |
0.2% |
| CAD |
14:00 |
10:00 |
Ivey Purchasing Managers Index s.a. (APR) |
60.8 |
63.5 |