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Non-farm payrolls rose by 211k in April, above the consensus estimate of 190k. Private-sector hiring expanded by 194k, while 17k were added to government payrolls.

The unemployment rate fell to 4.4%, the lowest level since May 2007, as the labor force participation edged down 0.1 percentage points to 62.9%.

Revisions were minor, subtracting 6k from payrolls on average in the previous two months.

Goods-producing employment rose a robust 21k, led by mining and logging, which added 10k - marking the sixth straight months of gains for the sector. Manufacturing added 6k, while construction added 5k. Services-producing employment rose 173k, led by gains in leisure and hospitality (+55k), education and health (+41k), and business services (+39k).

Average hourly earnings rose a healthy 0.3%, but the year-on-year metric edged down to 2.5% from 2.6% in March. Average weekly earnings were up a robust 0.6%, as hours of work edged up to 34.4 hours a week.

Key Implications

The American job machine returned to form in April. The re-acceleration in job should assuage fears that economic growth is slowing in any meaningful way. This confirms the Federal Reserve's message this week that the economy remains on track.

With unemployment pushing below its natural long-run rate, the participation rate remains an important indicator to watch. It's pullback in April, while slight, is not a great sign for those who believe the labor market still has a lot of cyclical slack remaining.

At 2.5%, wage growth is not yet flashing red signals, but is still sufficient to provide real gains in purchasing power. This should flow through to spending in the months ahead, providing the impetus for stronger economic growth.

USD/JPY - 112.59

Original strategy  :

Exit long entered at 112.20,

Position :  - Long at 112.20

Target :  -

Stop : -

New strategy  :

Stand aside

Position :  -

Target :  -

Stop : -

Although the greenback has rebounded after finding support at 112.09 and gain towards 112.90-00 cannot be ruled out, break of yesterday’s high at 113.05 is needed to confirm recent upmove has resumed and extend gain to 113.10-15 (61.8% projection of 108.13-111.78 measuring from 110.87) but reckon upside would be limited to previous resistance at 113.54 and price should falter well below 113.90-00.

In view of this, would not chase this rise here and would be prudent to stand aside for now. Below 112.09 support would bring test of 111.96 but break of this level is needed to signal a temporary top has been formed at 113.05, bring correction to 111.73-78 (38.2% Fibonacci retracement of 109.59-113.05 and previous resistance), however, reckon 111.21-32 (previous support and 50% Fibonacci retracement) would contain weakness.

Daily Pivots: (S1) 112.16; (P) 112.61; (R1) 112.90; More...

Intraday bias in USD/JPY remains neutral for consolidation below 113.04 temporary top. Further rise is still expected as long as 110.86 support holds. We'd holding on to the view that corrective fall from 118.65 has completed with three waves down to 108.12 already. Break of 113.04 will target 115.49 resistance. Firm break there will resume larger rally from 98.97 to 125.85 high. However, break of 110.86 support will keep USD/JPY inside near term falling channel and will turn bias back to the downside for 108.12 and below to extend the decline from 118.65.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. It's uncertain whether it's completed yet. But in case of another fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Meanwhile, break of 115.49 resistance will extend the rise from 98.97 to retest 125.85. Overall, rise from 75.56 is still expected to resume later after the correction from 125.85 completes.

Daily Pivots: (S1) 0.9830; (P) 0.9894; (R1) 0.9925; More.....

Intraday bias in USD/CHF remains on the downside for 0.9812 support and below. Note again that price actions from 1.0342 are seen as a correction. Break of 0.9812 should be brief and we will look for bottoming signal below there. On the upside, break of 0.9956 resistance will suggest that fall from 1.0107 is completed and turn bias back to the upside for this resistance.

In the bigger picture, we're still maintaining that firm break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the pair. However, the corrective nature of the fall from 1.0342 is starting to give the medium term outlook a bullish favor. Hence, in stead of looking for topping signal around 1.0342, we'd now pay closer attention to upside acceleration as USD/CHF approaches this level again.

Daily Pivots: (S1) 1.2855; (P) 1.2893; (R1) 1.2958; More...

Intraday bias in GBP/USD remains neutral as it's still bounded in range below 1.2965 temporary top. Further rise remains in favor with 1.2755 support intact. Break of 1.2965 will target 161.8% projection of 1.2108 to 1.2614 from 1.2365 at 1.3184. At this point, price actions from 1.1946 are still seen as a correction pattern. Therefore, we'd expect strong resistance below 1.3444 to bring larger down trend resumption. On the downside, break of 1.2755 minor support will turn bias to the downside. Further break of 1.2614 resistance turned support will now indicate near term reversal.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term reversal yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

Daily Pivots: (S1) 1.0909; (P) 1.0948 (R1) 1.1022; More....

Intraday bias in EUR/USD remains on the upside for the moment and further rally should be seen. Next target is 100% projection of 1.0339 to 1.0828 from 1.0569 at 1.1058. At this point, rise from 1.0339 is still seen as a corrective move. Hence we'd expect strong resistance from 1.1058 projection to limit upside and bring near term reversal. On the downside, break of 1.0874 support will turn bias back to the downside for 1.0569 support first.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. This would also be supported by sustained trading above 55 week EMA.

Dollar stays weak against Euro and Sterling in early US session as non-farm payroll risk is cleared. NFP showed 211k growth in the US job market in April, above expectation of 180k. However, prior month's weak figure was revised further down to 79k from 98k. Unemployment rate, however, dropped to 4.4%, down from 4.5% and below expectation of 4.6%. That's the lowest figure in nearly a decade since May 2007. Average hourly earnings showed 0.3% mom growth, in line with consensus. But prior month's wage growth was revised down to 0.1% mom.

Overall, the set of data does little to change the expected policy path of Fed. FOMC is expected to hike again in June, and another time possibly in September. Then Fed will take a brief pause to start the program to shrink its balance sheet. Markets will now listen to comments from Fed speakers, including Fed Chair Janet Yellen, Fed Vice Chairman Stanley Fischer, Boston Fed President Eric Rosengren, San Francisco Fed President John Williams, Chicago Fed President Charles Evans, and St. Louis Fed President James Bullard.

Canadian job data mixed, Loonie weak on oil price

Released from Canada, employment market grew 3.2k in April, well below expectation of 20.0k. Unemployment rate, however, dropped to 6.5%. Canadian dollar is set to end the week as one of the weakest major currencies, just next to Aussie and yen. Free fall in oil price is seen as the main factor driving down the Loonie. WTI crude oil dived to as low as 43.76 earlier today but recovers after drawing support from 44.09 fibonacci level.

OPEC hinted that it is likely for the output cut deal to be extended with the same terms, i.e. reducing production by 1.8M bpd, for 6 months. The market was disappointed as they had hoped for bigger reduction in the "new" deal. The goal of the output cut deal, announced late last year and effective in January 2017, is to rescue the massive selloff of oil prices. However, price performance signal that the cartel has probably lost control. The market is more concerned over the persistent increase in US oil production with the number of US oil rigs hitting a 2-year high last week.

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Euro strong on Macron set to win election

Euro is set to end the week as the strongest major currency. Markets are generally optimistic that pro-EU centrist Emmanuel Macron will win the French election on Sunday. And it's so overwhelmingly one-sided on such expectation that we have be to cautious on a sell of news reversal on Monday. Macron extended his lead over EU-sceptic far right Marine Le Pen. According to and Elabe poll for BFM TV and L'Express, Macron is set to get 62% of votes in the run-off. And Le Pen will only get 38%. That's a 24 pts lead, up 3 pts from the last Elabe poll. Macron was also voted as the most convincing one in the last pre-election debate earlier this week.

Elsewhere, Eurozone retail PMI rose to 52.7 in April. Swiss Foreign currency reserves rose to CHF 696b in April.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0909; (P) 1.0948 (R1) 1.1022; More....

Intraday bias in EUR/USD remains on the upside for the moment and further rally should be seen. Next target is 100% projection of 1.0339 to 1.0828 from 1.0569 at 1.1058. At this point, rise from 1.0339 is still seen as a corrective move. Hence we'd expect strong resistance from 1.1058 projection to limit upside and bring near term reversal. On the downside, break of 1.0874 support will turn bias back to the downside for 1.0569 support first.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. This would also be supported by sustained trading above 55 week EMA.

Economic Indicators Update

EUR/USD has been consolidating, following the first-round of the French election, flirting with a significant psychological level at 1.0900.

The second-round of the French presidential election will be held this Sunday May 7, and EUR has strengthened as markets expect Macron to win the final vote.

During the early European session today, EUR/USD reached a high of 1.0989, last seen on November 9 of 2016.

However, EUR/USD retraced as it was nearing a significant psychological resistance level at 1.1000 (where heavy selling pressure is expected). We can also speculate that many traders have reduced exposure ahead of the election to minimise risk.

If Macron wins we can expect EUR/USD to rise and likely break the resistance level at 1.1000.

Conversely, if Le Pen wins we can expect risk-off sentiment and market concerns over the collapse of the EU which will result in a selloff in EUR/USD.

Be aware that, the result will likely cause significant volatility in the market with the possibility of a gap in Friday's close and Monday's open during early Asian session.

The resistance level is at 1.1000 followed by 1.1050.

The support line is at 1.0950 followed by 1.0930 and 1.0900.

Please note that the release of US labour market data (Apr), at 13:30 BST today, will likely cause volatility for USD, USD crosses and commodities.

The Fed didn't raise the key interest rate yesterday, as we expected. It was left at the previous level of 0.75-1.00%. The latest reports from the US appeared to be weak. But the Central Bank said that a slowdown of the GDP growth is temporary. They also announced that consumer spendings and the labor market are at a quite good level now. Everyone who work with the financial markets are optimistic about that comments. So, the probability of the interest rate growing has increased greatly. The FedWatch Tool is at the 73.8% level at the moment.

Source: cmegroup.com

We could notice strong purchases on the USD/CAD currency pair during the last 3 weeks. The Canadian dollar has lost more than 400 points against USD. It happened due to the negative dynamics on the oil market. Here is the chart where we can see that the WTI oil has decreased by more than 14% during the last month.

A current technical pattern on USD/CAD:

Support levels: 1.3700, 1.3535, 1.3415

Resistance levels: 1.3800

The Inside Bar is a classic PA pattern which has formed on the H4 chart. It indicates the continuation of the current trend. The price of the asset has fixed near the 1.3800 level and the main candle. Indicators show us the strength of buyers. The MACD histogram is in the positive zone, while the price of USD/CAD is above the 50 and 200 MA.

We'd advise to long this pair after it fixes above the 1.3800 round resistance level. Entry points should be searched for on the younger timeframes. It's recommended to accompany this position with a trailing stop to fix the profit. The goal of this deal is 1.3875. We think that this asset can reach the 1.3950 level in the medium term.

April's non-farm payrolls report is due out this morning at 08.30 am EST, and consensus is looking for +185k new jobs and the unemployment rate to stay atop of +4.5%.

Any print above the +150k benchmark will be considered good enough for the Fed to hike rates soon, but anything below and investors will be worrying that the U.S economy is officially losing 'steam.'

Aside from today's NFP print, there are a plethora of Fed speakers doing the rounds. Fed Chair Janet Yellen will speak in at 1:30 pm EST and top brass San Francisco Fed President Williams, St. Louis Fed President Bullard and Fed Vice-Chair Fisher are all due to speak this afternoon and expect them to provide a good deal of clarity on Wednesday's FOMC statement.

Elsewhere, a slump in commodity prices has triggered a rally in safe-haven bonds, the yen and gold.

1. Global equities see red

Equity markets are on the back foot in the overnight session, leading the cause are Chinese shares, which completed its longest losing streak this year as regulators try to curb leverage and speculation.

In China, the blue-chip CSI300 index fell -0.6%, while the Shanghai Composite Index dropped -0.8% overnight – fresh three-month lows and their fourth weekly loss in a row.

Down-under, the Aussie S&P/ASX 200 Index lost -0.7%, falling for a fourth straight day, pressured by weaker commodity prices.

In Europe, indices are trading off the session lows, but lower across the board with the exception of the FTSE100, which is taking its queue from a weaker session in Asia being led lower on commodity price concerns.

U.S stocks are expected to open little changed (+0.1%).

Indices: Stoxx50 -0.3% at 3616, FTSE +0.1% at 7255, DAX -0.3% at 12606, CAC-40 -0.2% at 5362, IBEX-35 -0.2% at 10995, FTSE MIB -0.2% at 21122, SMI -0.3% at 8953, S&P 500 Futures +0.1%.

2. Oil prices plummet, gold in demand

In the overnight session, oil prices have plunged to new five-month lows on the back of OPEC and other producers appearing to rule out deeper supply cuts to reduce the world's persistent glut of crude.

Brent crude futures are at +$47.88 per barrel, down -50c or -1% from Thursdays close. Prices fell to as low as +$46.64, the lowest since Nov. 30, while U.S West Texas Intermediate (WTI) crude oil futures are trading at +$44.92 per barrel, down -60c or -1.3%, after a more than -4% drop yesterday.

Note: WTI futures are below levels when OPEC and other producers agreed cuts late last November.

The market seems to agree that these steep price falls will likely force OPEC members to extend production cuts later this month, however, for the 'crude bulls' the prospect of deeper cuts continue to appear relatively slim.

Gold (+0.5% to +$1,233.10 per ounce) is up on a safe-haven bid, but is on track for its worst week in six-months. On Thursday, the yellow metal printed its seven-week of +$1,225.20 an ounce.

Oil was not the only commodity that suffered. Chinese iron ore futures fell -7% after tumbling -8% yesterday on concerns that global commodity demand may fall sharply in the face of record supplies.

3. Global yields under pressure despite the overnight demand

Despite the overnight safe haven Asian demand, U.S Treasuries are under broad selling pressure, which has U.S 10's yields rallying to the highest in more than three-weeks (+2.36% vs. +2.31% on Wednesday).

Factors hurting the bond market include the follow-through of selling driven by the Fed's statement Wednesday leaving the door ajar for a rate hike next month, yesterday's report showing unit labor costs jumping by +3.0% in 1Q, a sign of inflation, and finally, the selloff in German bunds on a Emmanuel Macron win in this weekends second round French Presidential vote.

Currently, Fed fund futures are pricing in a +76% probability of a hike next month.

4. The 'big' dollar finds some support, but EUR has legs

Ahead of the U.S open, the EUR (€1.0952) has slipped lower outright, after earlier reaching a six-month high of €1.0992 when it stalled ahead of the psychological handle of €1.10.

However, a market favorable outcome in this weekend's French presidential election, in the form of victory for centrist Emmanuel Macron over far-right candidate Marine Le Pen, is likely to boost the 'single unit.' But, don't be surprised if the EUR gains are relatively limited since a Macron victory is widely expected.

Europe's single unit has garnered support this week on the back stronger regional data and on speculation that the ECB will begin reducing monetary stimulus sooner rather than later.

If this morning's NFP headline prints a below-forecast reading it's likely to see the €1.10 handle easily penetrated.

Elsewhere, sterling (£1.2937) is back above the psychological £1.29 level and recovering from losses from earlier in the week. The pound is benefiting from U.K local elections that suggest PM May's Conservative Party are on course for a sweeping victory at the upcoming Jun 8th Parliamentary election.

5. RBA's Quarterly Monetary Policy statement

The Aussie central bank's latest policy statement overnight will be a challenge for the AUD 'bears' (A$0.7393).

The statement erred on the optimistic side with increased confidence in its base case for a return to +3% growth. It also anticipated edging down of unemployment and a view of modestly higher inflation. Fixed income dealers have not been pricing their yield curve as optimistically as the central bank's rhetoric.

However, it did reiterate their view that an appreciating AUD currency would complicate the economy's transition.