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The U.S. dollar was seen trading weaker on Friday despite a broadly positive jobs report. The U.S. economy was seen adding 213k jobs during the month of May with revisions to previous two months of data showing a net gain of 37,000.

The Greenback weakened after the unemployment rate ticked higher to 4.0% on a modestly higher participation rate. This suggested that more people were looking for jobs. Wage growth was seen subdued, rising just 0.2% on the month missing estimates of a 0.3% increase.

Elsewhere, Canada's jobs report showed that the economy added 31.8k jobs but the unemployment rate had ticked higher from 5.8% to 6.0%

Following a busy Friday, the markets open this week on a quiet note. The German trade balance numbers are coming up during the European trading session. Among central bank speeches, the MPC member, Broadbent is expected to speak.

The Eurozone Sentix investor confidence report will be coming out later in the day.

Economic data from the NY trading session is quiet with only the U.S. consumer credit report scheduled.

In the U.S. the payrolls report is expected to show that the economy added 195k jobs on the month, marking a slower pace compared to the 223k jobs added the month before. The U.S. unemployment rate is expected to hold at 3.8% and the wage growth is forecast to rise 0.3% on the month.

Rates: Improvement in risk sentiment today's main market driver?

Core bonds are expected to start the week on the soft side given the improvement in risk sentiment and this week's thin eco calendar. Today's highlight is ECB Draghi's speech in front of European Parliament. We expect him to hold the line of the June policy meeting. Explaining the semantics of the new forward guidance in greater detail is a wildcard.

Currencies: EUR/USD extends rebound due to risk-on sentiment and soft US wages

EUR/USD developed a bottoming out process last week. This pattern was reinforced Friday. Soft US wage growth weighted on the dollar and an improved risk-sentiment was also EUR/USD positive. EUR/USD regained 1.1720 resistance. EUR/USD 1.1850 is the next reference on the charts. Ongoing Brexit noise continues to affect sterling

The Sunrise Headlines

• US equity markets ended the week in green with gains ranging from 0.4% (DJI) to 1.3% (Nasdaq). Asian stock markets are performing very well this morning, suggesting an easing in trade war tensions. China (+2%) outperforms.
• Britain's pro-Brexit secretary Davis and his deputy Bakern resigned from the government two days after PM May pushed through her Brexit-strategy. It could trigger a Tory revolt against May's plan, dubbed a 'Brexit in name only'.
• North Korean state media called US Secretary of State Pompeo's Pyongyang visit 'regretful'. They said the US did not mention establishing a peace regime on the Korean Peninsula, which is essential for the country to denuclearize.
• Russia has imposed tariffs of 25 to 40% on some US imports, including oil and gas equipment and fibre optics. The tariffs are ought to compensate (only) $87.6m of the $537.6m hit Russian exporters are expected to take.
• China is offering the EU a preferential treatment and wants to speed up the investment negotiations that started in 2013. The move is seen to form a front against the US trade policy.
• ECB's Coeuré said the ECB is wary of any trade war escalation, but added that 'what we've seen doesn't have potential to derail the recovery' and that there is 'no reason to change policy expectations.'
• Today's eco calendar contains only secondary data as the EMU Sentix Investor Confidence (July) and German imports/exports are released. ECB's Nowotny (13:00) and Draghi (15:00) are scheduled to speak.

Currencies: EUR/USD Extends Rebound Due To Risk-On Sentiment And Soft US Wages

EUR/USD extends rebound on soft US wages

Last week's ST reversal suggesting a stronger euro and an easing of the dollar continued on Friday. Sentiment on risk improved further even as the US and China imposed mutual import tariffs, taking some shine off the dollar. The USD lost further ground after the payrolls. Job growth was solid, but wages disappointed again. The USD probably won't get much additional interest rate support soon. EUR/USD cleared the 1.1720 level and closed at 1.1746. USD/JPY also lost a few ticks despite a positive risk sentiment and finished the session at 110.47.

This morning, sentiment on risk stays constructive. Markets apparently feel confident that the further negative impact from the US-China trade conflict will remain manageable. Balanced US payrolls with a softer dollar and no need for the Fed to step up the pace of rate hikes is also positive for Asian/EM sentiment. The trade-weighted dollar is drifting back south below the 94 barrier. EUR/USD is changing hands at around 1.1760. Comforting comments from ECB's Coeure during the weekend are a slightly euro positive, too. USD/JPY still hardly profits from the risk-rebound. The pair hovers in the mid 110 area.

Today, the eco calendar in the Europe and the US is almost empty except for some ECB speeches with ECB president Draghi attending a hearing before the European Parliament. (FX) markets will be keen to hear anything he eventually has to add to the debate on the timing of a first rate hike. He will probably hold to the message the ECB gave after the June policy meeting. At the same time, he might keep the door open for an early (September) rate hike (data dependent). At the end of last week, we indicated that the fortunes for EUR/USD probably changed at least ST unless the payrolls would be very strong. Soft US wage data opened the way for EUR/USD to break beyond the 1.1720 resistance. In a positive risk context, some further EUR/USD gains are possible. 1.1850 is the next technical reference on the charts.

On Friday, it looked that UK PM reached a consensus on a plan for a rather soft Brexit. However, UK Brexit Secretary Davis and two other ministers resigning this the weekend, suggest that the Brexit stalemate hasn't been solved yet. EUR/GBP declined temporary to the 0.8810 area this morning, but trades again in the 0.8850 area. For now, we don't see a trigger for a sustained sterling rebound. In case of further EUR/USD gains, EUR/GBP might also drift further north toward the 0.89 barrier.

EUR/USD extends rebound as risk sentiment improves and as soft US wages weigh on USD.

Ex-Brexit Minister David Davis told BBC Radio that PM Theresa May's Brexit plan had a "number of weaknesses" and gives away "too much" to the EU. He called that a "dangerous strategy". And he said he was clear after Friday's that that he was the "odd man out".

Nonetheless, Davis also said he "won't be encouraging people" to mount a leader change in the UK and added that "I like Theresa May, i think she is a good PM". And he didn't expect others ministers to follow him to resign. He said "the simple truth is people can only make these decisions of conscience, decisions of principle by themselves, in their own minds,"and you can't make the decision for somebody else and you can't offload it on somebody else."

Daily Pivots: (S1) 146.33; (P) 146.56; (R1) 147.03; More...

GBP/JPY's rebound form 143.76 is still in progress and reaches as high as 147.27 so far. Focus is now on 148.10 resistance. Decisive break there will be a strong signal of near term reversal. Further rally would be seen to 149.99 resistance for confirmation. On the downside, break of 143.18 low will extend the fall from 156.59 for 139.25/47 cluster support level.

In the bigger picture, no change in the view that decline from 156.59 is a corrective move. In case of another fall, strong support should be seen above 139.29 cluster support (50% retracement of 122.36 to 156.59 at 139.47) to contain downside and bring rebound. Meanwhile, break of 153.84 should confirm that the correction is completed and target 156.59 and above to resume the medium term up trend.

Daily Pivots: (S1) 129.34; (P) 129.66; (R1) 130.07; More....

EUR/JPY's rebound continues today and edges higher to 130.16 so far. Focus stays on 130.33 resistance. Decisive break there will resume the rebound from 124.61. More importantly, the sustained break of near term falling channel would be a strong sign of trend reversal. In this case, further rise should be seen to 133.47 resistance for confirmation. On the downside, below 128.49 minor support will turn bias to the downside for 127.13 support. Break will target a test on 124.61 low.

In the bigger picture, for now, EUR/JPY is holding above 124.08 key resistance turned support. Fall from 137.49 could be proven to be a correction. Decisive break of 133.47 resistance will confirm its completion and should extend the rise from 109.03 (2016 low) through 137.49 high. However, firm break of 124.08 will confirm trend reversal. That is, whole rise from 109.03 (2016 low) has completed at 137.49 already. In that case, deeper fall should be seen back to 61.8% retracement of 109.03 to 137.49 at 119.90 and below.

Daily Pivots: (S1) 0.8825; (P) 0.8848; (R1) 0.8861; More...

EUR/GBP is still bounded in range below 0.8890 and intraday bias remains neutral. With 0.8796 minor support intact, further rally is still expected in the cross. On the upside, above 0.8890 will resume the rally from 0.8620 and target 0.8967 cluster resistance (50% retracement of 0.9305 to 0.8620 at 0.8963). However, break of 0.8796 will be the first sign that whole rebound from 0.8620 is completed. Deeper fall would then be seen to 0.8724 support for confirmation.

In the bigger picture, EUR/GBP is staying in long term consolidation pattern from 0.9304 (2016 high). Such consolidation pattern could extend further. Hence, in case of strong rally, we'd be cautious on strong resistance by 0.9304/5 to limit upside. Meanwhile, in another decline attempt, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.

Daily Pivots: (S1) 1.5770; (P) 1.5810; (R1) 1.5854; More....

EUR/AUD is staying in range below 1.5886 and intraday bias remains neutral. Further rise is expected with 1.5696 minor support intact. On the upside, break of 1.5886 will resume the rebound from 1.5271 and target 1.6189 high. However, as the rebound from 1.5271 is not clearly impulsive yet and momentum isn't too convincing. Break of 1.5695 minor support could be an early sign of near term topping. In such case, bias will be turned back to the downside for 1.5425 support.

In the bigger picture, current development suggests that fall from 1.6189 is a corrective move and has completed at 1.5217 already. Key support levels of 1.5153 and 38.2% retracement of 1.3624 to 1.6189 at 1.5209 were defended. And medium term rise from 1.3624 (2017 low) is still in progress. Break of 1.6189 will target 1.6587 key resistance (2015 high).

Daily Pivots: (S1) 1.1603; (P) 1.1621; (R1) 1.1644; More....

Intraday bias in EUR?CHF remains neutral at this point as upside was limited below 1.1656 resistance. On the upside, break of 1.1656 will resume the corrective rise from 1.1366 short term bottom. EUR/CHF should target 61.8% retracement of 1.2004 to 1.1366 at 1.1760. But we would expect strong resistance from there to limit upside. We'd still expect at least one more falling leg before the correction from 1.2004 completes. On the downside, break of 1.1478 will turn bias to the downside for 1.1366 first.

In the bigger picture, EUR/CHF was solidly rejected by prior SNB imposed floor at 1.2000. Considering bearish divergence condition in daily and weekly MACD, 1.2004 should be a medium term top. And price action from 1.2004 is correcting the up trend from 1.0629. Such correction is expected to extend for a while and therefore, we're not anticipating a break of 1.2004 in near term. Another decline cannot be ruled out yet. But in that case, strong support should be seen at 1.1198 (2016 high), 61.8% retracement of 1.0629 to 1.2004 at 1.1154 to contain downside.

Daily Pivots: (S1) 1.1692; (P) 1.1730 (R1) 1.1781; More.....

EUR/USD's rebound extends today and intraday bias stays mildly on the upside. While further rally could be seen, upside should be limited by 1.1851 to complete the consolidation pattern. On the downside, below 1.1679 minor support will turn bias back to the downside for retesting 1.1507 low first.

In the bigger picture, EUR/USD was rejected by 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. And, a medium term top was formed at 1.2555 already. Decline from there should extend further to 61.8% retracement of 1.0339 to 1.2555 at 1.1186 and below. For now, even in case of rebound, we won't consider the fall from 1.2555 as finished as long as 1.1995 resistance holds.

Daily Pivots: (S1) 1.3228; (P) 1.3260; (R1) 1.3316; More...

GBP/USD's rebound from 1.3048 short term bottom is still in progress and intraday bias stays on the upside. Break of 1.3314 should now extend the rebound extend the rebound towards 1.3471 resistance next. We'll expect strong resistance from 1.3471 to limit upside. On the downside, though, below 1.3200 minor support will turn bias to the downside for retesting 1.3048 low.

In the bigger picture, whole medium term rebound from 1.1936 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA (now at 1.4179). Fall from 1.4376 should extend to 61.8% retracement of 1.1936 (2016 low) to 1.4376 at 1.2874 next. We'll pay attention to the reaction from there to asses the chance of long term down trend resumption. On the upside, sustained break of 38.2% retracement of 1.4376 to 1.3048 at 1.3555 is needed to indicate medium term bottoming. Otherwise, outlook will remain bearish in case of strong rebound.