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U.S. Dollar Trading (USD) The Dollar index crashed below the key support at 95 as May NFP numbers missed expectations dramatically with the lowest number (38K) since 2010. Talk of a June FED Rate hike have now vanished and unless FED Chair Yellen surprises the market tonight by dismissing Friday's reports so is July. Yellen may downplay it as a one off and not changing the central banks course, but either way its likely the rate hike will be delayed to December.
The Euro (EUR) the door has open for the EUR/USD to resume its uptrend and 1.15-1.16 may be tested in coming weeks if it looks like the FED is on hold. Also important for the medium term outlook is the fallout of the Brexit vote with some analysts suggesting the leave vote will create contagion for other Eurozone countries and we may see more referendums and uncertainty. Such a result would be very negative for the Euro and global risk sentiment. The Sterling (GBP) was down -1% in early Asian trade as more polls suggest the leave camp are now in the lead and bookies start to increase the odds of it actually becoming reality. The chances are now at 30% according to book makers and the GBP has been crushed across the board. EUR/GBP is testing .07900 but bigger levels are the 0.8000. GBP/JPY is the other pair in focus as USD/JPY selling is sending the GBP cross into freefall.
The Japanese Yen (JPY) The main way to play NFP and it did not disappoint with the risk sensitive pair falling 200 pips on the shocking result. Y106 and Y105 are on the cards in coming days if Yellen does nothing to stop the rot. The BOJ/MOF though is always lurking and given the speed of the 500 pip decline last week we may seem strong jawbowning on any moves lower this week.The Australian Dollar (AUD) Swas helped by a short squeeze as the USD buyers bailed and we saw a strong move above 0.7300 but we have failed to continue in Monday trade with some easing ahead of the major risk event tomorrow in the RBA. They are unlikely to cut rates but may be attempt to jawbone the market lower and short circuit this nascent AUD/USD rally.
Stocks Indices(DAX) was beaten down more than the US stocks with some fears that a EUR/USD rally will hurt the German DAX priced in Euros to underperform in a weakening global outlook.US Stocks (DOW) bounced sharply off the knee jerk reaction lower and has given the bulls hope that the recent rally may still be alive. The numbers were terrible but with US rates likely lower for longer the downside from the numbers may be limited.
Pairs to watch
EUR/USD On the way back to 1.15?
OIL/USD doesn't want to go down, a break of $50 on cards?
Economic Data Ahead
FED Chairwomen Speaks for last time before the FOMC meeting next week
RBA Interest Rate Meeting
By Anthony Darvall (TonyD)