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Daily Pivots: (S1) 0.6987; (P) 0.7008; (R1) 0.7022; More...

AUD/USD drops to as low as 0.6984 so far today. Breach of 0.6988 temporary low suggests resumption of fall from 0.7295. Intraday bias is back on the downside for 100% projection of 0.7295 to 0.7003 from 0.7205 at 0.6913. Decisive break there will indicate further downside acceleration. On the upside, break of 0.7069 resistance is needed to indicate short term bottoming. Otherwise, outlook will remain bearish in case of recovery.

In the bigger picture, with 0.7393 key resistance intact, medium term outlook remains bearish. The decline from 0.8135 (2018 high) is seen as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 (2016 low) will confirm this bearish view and resume the down trend to 0.6008 (2008 low). However, firm break of 0.7393 will argue that fall from 0.8135 has completed. And corrective pattern from 0.6826 has started the third leg, targeting 0.8135 again.

Dollar turns mixed in Asian session today as markets turn their focus to non-farm payroll reports from US. The greenback has indeed been regaining grounds this gradually this week. In particular, it's helped by Fed Chair Jerome Powell who talked down the need of rate cut. But buyers are so far seen as hesitating to commit yet.

As for today, New Zealand Dollar is the strongest one so far, followed by Canadian and then Sterling. Swiss Franc is the weakest, followed by Australian and then Euro. The picture is rather mixed. For the week, commodity currencies are the weakest ones, led by Aussie. Sterling is the strongest one as BoE inflation report, at least, didn't paint a dovish picture. Euro is for now the second strongest but it's rather vulnerable.

Technically, EUR/USD's breach of 1.1175 minor support suggests that recovery from 1.1111 has completed. Retest of this temporary low should be seen next. USD/CHF is also heading back towards 1.0237 temporary low. AUD/USD breaches 0.6988 temporary low and is likely resuming recent decline from 0.7295. Dollar is ready to have a come back should NFP delivers.

In Asia, Hong Kong HSI is up 0.25%. China Shanghai SSE is up 0.52%. Singapore Strait Times is down -0.13%. Japan remains on holiday. Overnight, stocks were pressured on fading chance of Fed rate cut. DOW dropped -0.46%. S&P 500 dropped -0.21%. NASDAQ dropped -0.16%. 10-year yield jumped 0.041 to 2.552. Near term bullishness in 10-year yield was revived and focus is back on 2.6 handle.

Solid NFP expected as service sectors drive growth

Markets are expecting NFP to show 185k job growth in April. Unemployment rate is expected to be unchanged at 3.8%. Average hourly earnings growth is expected to pick up again to 0.3% mom.

Looking at other job data, the strong growth in ADP employment (275k) and sharp fall in ISM manufacturing employment (from 57.5 to 52.4) looks conflicting. But looking deeper ADP actually reported 223k growth in service jobs and only 52k in manufacturing jobs. The two reports were indeed consistent. That job growth was mainly from services sector. If ISM services would be released earlier than today, there would be more confirmation on the picture.

Meanwhile, four-week moving average of initial jobless claims was steady at 212.5k. Conference Board consumer confidence also rose from 124.2 to 129.2. The job related data generally support a solid set of NFP data today.

Dollar and treasury yields will likely be lifted if NFP delivers. Stocks could be pressured, in particular if wage growth beat expectations, on reducing chance of Fed cut. USD/JPY's reactions, thus could be mixed. Instead, AUD/USD, which is already pressing 0.6988 support, is a good candidate to sell in such developments.

Here are some suggested readings on NFP:

• US Jobs Report Awaited for Direction after Powell's Comments
• Euro's Close Could Be Key Post-NFP
• NFP Preview: Traders More 'In the Dark' Than Usual

Bundesbank Weidmann: Private consumption in Germany to overcome its weakness

Yesterday, Bundesbank President Jens Weidmann talked down risks of recession in Germany, as he spoke in a business forum. He said "given excellent labor market conditions and rising incomes, I expect private consumption in Germany to overcome its weakness". And, there were "early signs of this already as the retail sector recorded strong growth in the first quarter."

On ECB monetary policy, Weidmann said "the task of monetary policy is to ensure price stability... This means reacting to the weak domestic price pressures but also continuing on the path of policy normalization and not postponing unnecessarily if the inflation outlook permits it."

EU Juncker: Germany, Austria, Netherlands stand in the way of EU reform

European Commission President Jean-Claude Juncker complained that Germany, Austria, Netherlands are hindering Eurozone reforms. He told German newspaper Handelsblatt that "there is no progress with the deepening of the monetary union because the Netherlands, Austria and all too often Germany stand in the way when it comes to solidarity in action and joint responsibility."

On trade negotiations with the US, Juncker said EU is not aiming at a comprehensive deal along the lines of the Trans-Atlantic Trade and Investment Partnership. He also emphasized EU would not want to include agriculture in any trade deal. He added: "The Americans keep trying but we have stood our ground."

On the data front

Australia AiG performance of services index rose to 46.5 in April, up from 44.9. Boiling approvals dropped -15.5% mom in March, below expectation of -12.5% mom.

Swiss CPI and SECO consumer confidence will be released in European session. UK PMI services will be featured. Eurozone PPI and CPI will also be watched.

Later in the day, in addition to NFP, US will also release trade balance, wholesale inventories and ISM non-manufacturing.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.6987; (P) 0.7008; (R1) 0.7022; More...

AUD/USD drops to as low as 0.6984 so far today. Breach of 0.6988 temporary low suggests resumption of fall from 0.7295. Intraday bias is back on the downside for 100% projection of 0.7295 to 0.7003 from 0.7205 at 0.6913. Decisive break there will indicate further downside acceleration. On the upside, break of 0.7069 resistance is needed to indicate short term bottoming. Otherwise, outlook will remain bearish in case of recovery.

In the bigger picture, with 0.7393 key resistance intact, medium term outlook remains bearish. The decline from 0.8135 (2018 high) is seen as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 (2016 low) will confirm this bearish view and resume the down trend to 0.6008 (2008 low). However, firm break of 0.7393 will argue that fall from 0.8135 has completed. And corrective pattern from 0.6826 has started the third leg, targeting 0.8135 again.

Economic Indicators Update

Market movers today

Today we have a number of important events, starting with the euro area inflation print, where we expect a decent rebound in both headline and core inflation to 1.8% y/y and 1.2% y/y, respectively, from last month's low levels driven by seasonal effects from the timing of Easter.

In the US, the jobs report is due out later in the day. Overall, the labour market remains strong, but we think it is important to keep an eye on whether employment growth starts to decelerate. We expect average hourly earnings to have risen +0.25% m/m in April, unchanged at 3.2% y/y. We expect nonfarm payrolls to have risen 190k.

Markets will digest the outcome of the UK local elections and whether it means something for May's premiership.

We have a lot of Fed speeches today, where we will look for any differences in views after this week's FOMC meeting.

In Scandinavia , we get Norwegian and Danish unemployment data for April (page 2)

Selected market news

In the UK, not all results in the local elections were declared yet but so far the trend is that voters are punishing the Conservative Party and Labour, with LibDems and independents gaining seats. EUR/GBP has moved a bit lower this morning. Turnout was low. Neither Farage's Brexit Party nor the remain party, The Independent Group/Change the UK, stood in the elections but they will in the European elections later this month, where polls suggest the Conservatives will suffer an even heavier defeat.

In line with expectations, the Bank of England (BoE) announced yesterday that the Bank Rate will remain at 0.75% and that it would still be appropriate to tighten monetary policy over the coming years. Our base case remains that the BoE is on hold for the next 12 months.

There is no stress in the oil market over the end to Iran sanction waivers. Yesterday, the Brent oil price fell below USD71/bbl, weighed down by a stronger USD and weak equity market sentiment. The US started drawing on SPR already last week, as yesterday's inventory figures showed a draw of 550kb last week. That has helped push oil prices lower. Copper is on course for its biggest weekly drop since August.

US President Trump tweeted yesterday that Stephen Moore had pulled his Fed candidacy despite Moore saying earlier that he was still "all in". The reason was his remarks about women. We believe it is positive that both of Trump's candidates have now pulled their candidacies. Economic research indicates that monetary policy is most efficient when it is independent from short-term political views and the risk was that they would not be so.

The EU's Juncker has called the Bundesbank's Weidmann a "suitable" candidate for succeeding Mario Draghi as ECB president.

For the 24 hours to 23:00 GMT, the EUR declined 0.24% against the USD and closed at 1.1175.

On the macro front, the Euro-zone's final manufacturing PMI contracted to a level of 47.9 in April, compared to a level of 47.5 in the previous month. Market participants had expected the PMI to advance to a level of 47.8. The preliminary figures had indicated an advance to 47.8.

Separately, in Germany, the Markit final manufacturing PMI advanced to a level of 44.4 in April, compared to market anticipation and preliminary figures for a rise to a level of 44.5. The PMI had registered a reading of 44.1 in the prior month. Meanwhile, the nation's retail sales unexpectedly slid 2.1% on an annual basis in March. In the prior month, retail sales had registered a gain of 4.7%.

In the US, data indicated that the factory orders climbed to its highest level in 7-months by 1.9% on a monthly basis in March, more than market consensus for a rise of 1.6%. Factory orders had registered a revised drop of 0.3% in the previous month. Moreover, the nation's final durable goods orders rose 2.6% on a monthly basis in March, following a revised drop of 1.1% in the prior month. The preliminary figures had recorded an advance of 2.7%. Also, the preliminary non-farm business productivity jumped 3.6% on a quarterly basis in 1Q 2019, rising at its quickest pace since 2014 and compared to an advance of 1.9% in the previous quarter. Market participants had anticipated the non-farm business productivity to advance 2.2%. Meanwhile, the US seasonally adjusted initial jobless claims remained steady at a level of 230.0K in the week ended 27 April 2019, compared to market consensus for a decline to a level of 215.0K.

In the Asian session, at GMT0300, the pair is trading at 1.1175, with the EUR trading flat against the USD from yesterday's close.

The pair is expected to find support at 1.1158, and a fall through could take it to the next support level of 1.1140. The pair is expected to find its first resistance at 1.1206, and a rise through could take it to the next resistance level of 1.1236.

Moving ahead, traders would keep an eye on the Euro-zone's producer price index for March

and the consumer price index for April, slated to release in a few hours. Later in the day, the US advance goods trade balance and retail inventories for March along with non-farm payrolls, unemployment rate, average hourly earnings, the Markit services PMI and the ISM non-manufacturing, services & composite PMI, all for April, will garner significant amount of investors' attention.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP declined 0.17% against the USD and closed at 1.3033, after the Bank of England held its interest rate unchanged.

The Bank of England in its latest monetary policy meeting, unanimously voted to leave its key interest rate steady at 0.75%, as widely expected and expects an additional interest rate hike to balance inflation. Further, the central bank upgraded its GDP forecast to 1.5% from 1.2% in order to strengthen Brexit-related stock building.

In economic news, UK’s construction PMI climbed to a level of 50.5 in April, more than market expectations for a rise to a level of 50.3. The PMI had registered a level of 49.7 in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.3040, with the GBP trading 0.05% higher against the USD from yesterday’s close.

The pair is expected to find support at 1.3012, and a fall through could take it to the next support level of 1.2984. The pair is expected to find its first resistance at 1.3074, and a rise through could take it to the next resistance level of 1.3108.

Trading trend in the Sterling today is expected to be determined by UK’s Markit services PMI for April, set to release in a few hours.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD rose 0.10% against the JPY and closed at 111.52.

In the Asian session, at GMT0300, the pair is trading at 111.49, with the USD trading marginally lower against the JPY from yesterday’s close.

The pair is expected to find support at 111.35, and a fall through could take it to the next support level of 111.21. The pair is expected to find its first resistance at 111.65, and a rise through could take it to the next resistance level of 111.81.

Going forward, traders would closely monitor the Bank of Japan’s meeting minutes along with Japan’s Nikkei manufacturing and services PMIs, all slated to release next week.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.21% against the CHF and closed at 1.0193.

The Swiss Franc declined against the US dollar, amid dismal economic data

Data showed that Switzerland’s SVME manufacturing PMI unexpectedly contracted to a level of 48.5 in April, compared to a level of 50.3 in the previous month. Market participants had envisaged the PMI to register a rise to a level of 51.0. Moreover, the nation’s real retail sales eased 0.7% on an annual basis in March, higher than market anticipation for a fall of 0.4%. In the previous month, real retail sales had recorded a revised unchanged reading.

In the Asian session, at GMT0300, the pair is trading at 1.0195, with the USD trading a tad higher against the CHF from yesterday’s close.

The pair is expected to find support at 1.0177, and a fall through could take it to the next support level of 1.0160. The pair is expected to find its first resistance at 1.0208, and a rise through could take it to the next resistance level of 1.0222.

Looking ahead, traders would await Switzerland’s SECO consumer confidence index and the consumer price index for April, slated to release in a while.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD rose 0.23% against the CAD and closed at 1.3469.

In the Asian session, at GMT0300, the pair is trading at 1.3466, with the USD trading slightly lower against the CAD from yesterday’s close.

The pair is expected to find support at 1.3439, and a fall through could take it to the next support level of 1.3412. The pair is expected to find its first resistance at 1.3485, and a rise through could take it to the next resistance level of 1.3504.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the AUD declined 0.27% against the USD and closed at 0.6999.

In the Asian session, at GMT0300, the pair is trading at 0.6997, with the AUD trading a tad lower against the USD from yesterday's close.

Overnight data showed that Australia's AIG performance of services index climbed to a level of 46.5 in April, compared to a reading of 44.8 in the prior month.

On the other hand, the nation's seasonally adjusted building approvals tumbled 15.5% in March, compared to a surge of 19.1% in the previous month. Market had envisaged building approvals to record a decline of 12.0%. Also, the CBA final services PMI fell to a level of 50.1 in April, following a reading of 50.5 in the prior month.

The pair is expected to find support at 0.6978, and a fall through could take it to the next support level of 0.6960. The pair is expected to find its first resistance at 0.7022, and a rise through could take it to the next resistance level of 0.7048.

Going ahead, traders would await the Reserve Bank of Australia's interest rate decision followed by Australia's retail sales, trade balance data and AiG performance of construction index, all set to release next week.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, Gold declined 0.55% against the USD and closed at USD1271.70 per ounce, amid broad strength in the greenback.

In the Asian session, at GMT0300, the pair is trading at 1272.20, with gold trading slightly higher against the USD from yesterday’s close.

The pair is expected to find support at 1267.63, and a fall through could take it to the next support level of 1263.07. The pair is expected to find its first resistance at 1276.43, and a rise through could take it to the next resistance level of 1280.67.

The yellow metal is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.