We saw a bit of risk off and dollar negative flow across the market over the course of yesterdays trading as the potential for geo political risk from the Sino-US Trade negotiations in Beijing and poorer than expected employment data hit the market. The US equity market was looking particularly poor at one point but recovered to flat by the end of the day. The dollar still remains at strong levels but the market focus is definitely moving towards tonight’s key numbers out of the states.
With the exception of the pound which has seen a recent run of poor data and political risk in the UK, the rest of the major currencies managed to make some ground against the greenback with the Dxy dropping off of recent highs near 93.00 to trade around 92.40 as we move into todays Asian session.
The main focus of the day will be the US data with the headline Non-Farm Payrolls expected to come in at +192k, however investors will be paying as much attention to the Wage numbers with the monthly data expected at +0.2%. Most commentators appear to be leaning towards the topside again and the cyclical data for April tends to back this theory up, which, given the recent strong run of the dollar does place the risk firmly to the downside for the greenback. Adding to that potential move are the on going trade talks in China and any sign of them coming to a less than agreeable conclusion could open the path for a sharp move to the downside in risk assets and global equities.
Ahead of the US session, the main focus in Asia will be the RBA’s latest Monetary Policy Statement but the market is anticipating that to be very much a damp squib with the Governor giving advance warning of that earlier in the week. There’s little in the way of data for the market to get stuck into during the London session and so the focus will quickly come to those crucial US numbers at the start of the New York day.