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For the 24 hours to 23:00 GMT, the USD declined 0.58% against the JPY and closed at 109.18.

In the Asian session, at GMT0300, the pair is trading at 108.98, with the USD trading 0.18% lower against the JPY from yesterday’s close.

The pair is expected to find support at 108.69, and a fall through could take it to the next support level of 108.41. The pair is expected to find its first resistance at 109.5, and a rise through could take it to the next resistance level of 110.03.

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

For the 24 hours to 23:00 GMT, the USD declined 0.11% against the CHF and closed at 0.9978.

In the Asian session, at GMT0300, the pair is trading at 0.9974, with the USD trading a tad lower against the CHF from yesterday’s close.

The pair is expected to find support at 0.9954, and a fall through could take it to the next support level of 0.9933. The pair is expected to find its first resistance at 0.9997, and a rise through could take it to the next resistance level of 1.0019.

With no macroeconomic releases scheduled in Switzerland today, investors would direct their attention to Switzerland’s inflation and unemployment rate data, both due 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 declined 0.20% against the CAD and closed at 1.2852.

On the macro front, Canada's international merchandise trade deficit surprisingly widened to C$4.14 billion in March, compared to a revised deficit of C$2.93 billion in the previous month, while markets were expecting the nation's international merchandise trade deficit to narrow to C$2.25 billion.

In the Asian session, at GMT0300, the pair is trading at 1.2846, with the USD trading 0.05% lower against the CAD from yesterday's close.

The pair is expected to find support at 1.2806, and a fall through could take it to the next support level of 1.2765. The pair is expected to find its first resistance at 1.2898, and a rise through could take it to the next resistance level of 1.2949.

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

For the 24 hours to 23:00 GMT, Gold rose 0.51% against the USD and closed at USD1313.60 per ounce, as weakness in the US Dollar and geopolitical tensions, boosted demand for the safe haven asset.

In the Asian session, at GMT0300, the pair is trading at 1314.10, with gold trading marginally higher against the USD from yesterday’s close.

The pair is expected to find support at 1307.73, and a fall through could take it to the next support level of 1301.37. The pair is expected to find its first resistance at 1319.73, and a rise through could take it to the next resistance level of 1325.37.

The yellow metal 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, Silver rose 0.27% against the USD and closed at USD16.47 per ounce, tracking gains in gold prices.

In the Asian session, at GMT0300, the pair is trading at 16.49, with silver trading 0.12% higher against the USD from yesterday’s close.

The pair is expected to find support at 16.38, and a fall through could take it to the next support level of 16.26. The pair is expected to find its first resistance at 16.61, and a rise through could take it to the next resistance level of 16.73.

The white metal 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, Crude Oil rose 1.11% against the USD and closed at USD68.48 per barrel, amid concerns that possible new US sanctions against Iran would tighten global crude market.

In the Asian session, at GMT0300, the pair is trading at 68.40, with oil trading 0.12% lower against the USD from yesterday’s close.

The pair is expected to find support at 67.52, and a fall through could take it to the next support level of 66.64. The pair is expected to find its first resistance at 68.97, and a rise through could take it to the next resistance level of 69.54.

Crude oil is trading above its 20 Hr and 50 Hr moving averages.

Daily Pivots: (S1) 0.7495; (P) 0.7519; (R1) 0.7554; More...

AUD/USD's recovery from 0.7472 extends today but it's staying below 0.7583 minor resistance. Intraday bias remains neutral at this point and further decline is expected. As noted before, sustained break of of 0.7500 key support level will indicate medium term reversal and target next support at 0.7328. However, break of 0.7583 will indicate short term bottoming, on bullish convergence condition in 4 hour MACD. And stronger rebound could be seen back to 38.2% retracement of 0.8135 to 0.7472 at 0.7725 and possibly above.

In the bigger picture, medium term rebound from 0.6826 is seen as a corrective move. Decisive break of 0.7500 key support will suggest that such correction is completed. In that case, deeper decline would be seen back to retest 0.6826 low. In case of another rise, we'd expect strong resistance from 38.2% retracement of 1.1079 to 0.6826 at 0.8451 to limit upside to bring long term down trend resumption eventually.

Initial selloff in the US stock markets overnight shot up Japanese Yen. DOW initially dipped to as low as 23531.31, suffering near 400 pt loss, but reversed and closed up 0.02% at 23930.15. Nonetheless, S&P 500 and NASDAQ closed in red, down -0.23% and -0.18% respectively. Yen pared back some gains on stocks rebound but remains one of the strongest for the week. The torch is then passed to Australian Dollar today. The Aussie responds well to RBA monetary statement and surges broadly. But going forward, Dollar will surely take back the stage with non-farm payroll featured.

NFP expected to grow 194k, wage growth the maker mover

US non-farm payrolls report will be the main feature today. Markets expect 194k job growth in April. Unemployment rate is expected to drop from 4.1% to 4.0%. Average hourly earnings are expected to rise 0.2% mom. Pre-NFP job data saw ADP job grew solid 204k. Employment component of ISM manufacturing and services dropped to 53.6 and 54.2 respectively, both showing slowdown but still well in expansion territory. Weekly jobless claims have been exceptionally low in the prior weeks.

There isn't much concern on the headline number as the most other data pointed to healthy employment market. Instead, there could be a pleasant surprise of upward revision in March's dismal figure of 103K. Wage growth will likely continue to be the market mover.

Mnuchin: There were "very good conversations" with China

US Treasury Secretary Steven Mnuchin, now in Beijing on the second day of trade talk with China, said there were "very good conversations". But he didn't made any further comments. Meanwhile, Mark Calabria, chief economist to U.S. Vice President Mike Pence, commented on the US-China trade negotiations in Washington. He said that the "full day of negotiations" has been "fairly positive". There were "pretty positive things" from China. But "the question question is whether they will actually do them".

The official China Daily newspaper said in an editorial that "acceptable agreements can be reached if both sides have realistic expectations of their give and take." The usually hawkish Global Times said that "since both sides have their bottom lines to keep, it may be hard to reach a deal, but it is good to start somewhere."

RBA to stay patient despite slightly more positive than expected forecasts

In RBA's latest Statement on Monetary Policy, economic projections were largely unchanged. Overall, the projections are slightly more positive than expected. But there wouldn't be any change to the expectation that RBA will stand pat throughout 2018, at least. There was no downward revision in GDP forecast. Underlying inflation forecasts were revised slightly up. On the negative side, unemployment rate will take longer to drop again.

And as noted in the statement, RBA said "the forecasts reflect the expected decline in spare capacity in the economy as GDP growth picks up and as the labour market moves towards full employment." And, "a key area of uncertainty for the inflation outlook is around how quickly wages growth picks up in response to improving labour market conditions."

Year-average GDP growth is forecast to be at 3.00% in 2018 and 3.25% in 2019. CPI inflation is forecast to rise to 2.25% at 2018 year end and stay there till June 2020.

The first change is that unemployment rate forecast was raised to 5.50% in June 2018 and December 2018, revised up from 5.25%. Onwards, unemployment rate is projected to drop to 5.25% in June 2019 and stay there till June 2020.

The second change is that underlying inflation is expected to be higher at 2.00% in June 2018 and December 2018, revised up from 1.75%. Then underlying inflation is projected to stay a 2.00% till picking up again to 2.25% in June 2020.

Below are the most updated forecasts.

Here are February projections.

Elsewwhere

China Caixin PMI services rose to 52.9 in April, up from 52.4. Eurozone will release PMI services revision today, as well as retail sales. Canada will release Ivey PMIs later in US session.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.7495; (P) 0.7519; (R1) 0.7554; More...

AUD/USD's recovery from 0.7472 extends today but it's staying below 0.7583 minor resistance. Intraday bias remains neutral at this point and further decline is expected. As noted before, sustained break of of 0.7500 key support level will indicate medium term reversal and target next support at 0.7328. However, break of 0.7583 will indicate short term bottoming, on bullish convergence condition in 4 hour MACD. And stronger rebound could be seen back to 38.2% retracement of 0.8135 to 0.7472 at 0.7725 and possibly above.

In the bigger picture, medium term rebound from 0.6826 is seen as a corrective move. Decisive break of 0.7500 key support will suggest that such correction is completed. In that case, deeper decline would be seen back to retest 0.6826 low. In case of another rise, we'd expect strong resistance from 38.2% retracement of 1.1079 to 0.6826 at 0.8451 to limit upside to bring long term down trend resumption eventually.

Economic Indicators Update

US non-farm payrolls report will be the main feature today. Markets expect 194k job growth in April. Unemployment rate is expected to drop from 4.1% to 4.0%. Average hourly earnings are expected to rise 0.2% mom. Pre-NFP job data saw ADP job grew solid 204k. Employment component of ISM manufacturing and services dropped to 53.6 and 54.2 respectively, both showing slowdown but still well in expansion territory. Weekly jobless claims have been exceptionally low in the prior weeks.

There isn't much concern on the headline number as the most other data pointed to healthy employment market. Instead, there could be a pleasant surprise of upward revision in March's dismal figure of 103K. Wage growth will likely continue to be the market mover.

Below are the charts on March data (released on April 6).

STOCKS

Dow (23930.15, +0.022%) came down to test as low as 23500 before rising back sharply to close at 23930. The bulls do not look strong just now but there is buying pressure near 23500-23750 levels. The narrow range of 23500-24000 may continue today also before a sharp breakout on either side is expected next week.

Dax (12690.15, -0.88%) is stable in the 12600-12800 region. The break above 12600 needs to sustain to take the index higher towards 13000.

Shanghai (3096.71, -0.13%) is also likely to show some sharp movement next week either breaking below 3050 or above 3150 to decide on further directional course.

It would be important to see if Nifty (10679.65, -0.36%) remains below 10800 in the near term and heads towards 10600-10500. A fall from current levels would indicate some bearishness for Nifty in the coming week.

COMMODITIES

72 on Brent (73.60, -0.03%) and 66 on Nymex WTI (68.43, -0.01%) could be immediate supports that may hold and push the prices back to higher levels. While 72 and 66 holds, the prices could either stabilize and move sideways or rally up towards 74-75 and 69-70 respectively.

Gold (1313.90, +0.09%) is trying to recover from levels near 1300 and could soon move up to 1320/30.

Copper (3.0910, +0.37%) could be stuck in the 3.15-3.05 region for a few sessions. A break below 3.05 could take it down towards 2.95.

FOREX

Dollar index (92.38) saw highs near 92.8 in the last couple of days after the US Fed expressed positivity regarding future inflation in its 2nd May meeting. If it dips below 92.3 today, it could then move down further towards 92.0-91.5, after which it should again resume its uptrend. The next target on the upside in the medium term could be 94-95 (which corresponds to the 5th wave starting point of the downmove since Dec ’16). It is also seen on daily line chart as resistance on trendline coming down from Jan ’17 and could be tested in the next 2 weeks.

Euro (1.1991) as per our expectation is moving up towards 1.20. If it moves above 1.201, it could then go up till 1.205-1.210 before resuming its downtrend again in the medium term. The medium term target would be levels near 1.16-1.17 (which is the 5th wave starting point of the Euro’s upmove since Dec ’16). This downside target is also seen as support on trendline in the daily line chart.

Dollar Yen (108.99) : As per expectation, Dollar Yen has dipped to 109 after testing highs near 110.04 day before yesterday. It could dip further to test support on daily candles near 108.75 and then move higher again towards 110.5-110.75. The broader uptrend looks capped till 110.50-110.75 in the medium term, after which Dollar Yen could turn bearish.

Euro Yen (130.72) : Against our expectation, Euro Yen has broken below support near 131 on weekly candles. There is lower support on weekly candles near 130.00-129.75, which looks unlikely to be broken next week as we expect both Dollar Yen and Euro to move up towards 110 and 1.200-1.210 respectively. In case both Dollar Yen and Euro turn bearish, Euro Yen could break the support near 130.00-129.75.

Pound (1.3585) is continuing to move down towards its next downside target of 1.35-1.345 (seen on daily candles), which could possibly be tested next week. It broke below crucial long term support level near 1.385 on weekly line chart earlier this week, which would possibly lead to medium term bearishness for the Pound.

Dollar Rupee (66.6475) may test 66.50/45 in the next couple of sessions (medium term target of 66.30/25 remains while below 66.60).

INTEREST RATES

The Fed maintained status quo on 2nd May but expressed positivity regarding rising inflation. This hawkish component had taken the US 10 year yield towards 2.99% but the yield has continued to dip after that towards 2.93%.

Repeating yesterday’s comment: The medium term targets for US yields in our Apr ’18 US Treasury report (available on demand) are as follows: 3.2%-3.3% (10 Year), 3.4%-3.5% (30 Year), 3.15% (5 Year) and 2.75% (2 Year). A breach of the 3% level by the 10 year yield would be vital for these targets to be achieved by June. A rate hike is expected in the June Fed meeting, which might start getting factored later this month and could henceforth lead to a rally in yields towards these medium term targets. We also expect some more yield curve flattening in the next month followed by steepening after that, as yields bounce from long term supports.

US 10 Yr Yield (2.95%), 30 Yr (3.12%), 5 Yr (2.78%), 2 Yr (2.48%):

The US 2 year yield (2.48) after having tested the psychologically important 2.5% level might now continue to move down till 2.45%.

There could be some support for the 10 Year yield (2.95%) near 2.93% on the short term chart, which it tested yesterday. If this support holds, it should again start moving up towards 3%. A rise back above 3% could happen later this month as the June Fed rate hike starts getting factored by traders.