EUR/usd
To discern the market reaction to Friday's payrolls you'll probably have to use a microscope. It's somewhat surprising as usually the release of the figure causes much movement in the markets and can even set the trend for the further month. Apart from the strong market reaction the indicator is also famous for its unpredictability: there is always a range of diverging forecasts and a wide discrepancy markets turned out mistaken in their estimates. The released data showed that employment growth made only 120K against the forecasted “above 200K”. According to the updated statistics the employment growth peaked in January, when the number of jobs rose up to 275K, in February employment increased by 240K. Can it be really true that this year the growth rate has started to slow down earlier than last year? A year ago the peak of labour growth fell on April (+251) and then was followed by a sharp drop in May (+54). Nearly the same scenario has been expected this year. If the published data are not a one-time failure, we should give a serious consideration to the dollar perspectives: perhaps they are not that rosy. Recent weeks the growth of the American currency has been stimulated by positive economic data and dwindling chances of further QE from Fed. But now it has suddenly turned out that improvement is running not that smoothly. How will the market react to it, when it comes back from the prolonged weekend on Tuesday, we wonder? For justice' sake we should mention the positive aspects of the report as well. Employment in manufacture keeps growing at quite a high pace. And many even call the manufacturing data preliminary for the whole economy. If true, the dollar has chances for better performance. Another positive aspect concerns the decrease of unemployment down to 8.2% against 8.3%. In addition, average hourly earnings have grown a bit (+0,2% m/m, 2,1% y/y), which is also a favourable signal for the future. So, at least in this direction the situation unfolds in a healthy way. Probably, the current figures will prove just a slight misfire similar to that we saw in weekly reports on unemployment claims in February and March, when the number of initial claims first jumped up, but then again decreased.
GBP/USD
The British pound makes no headway, hovering around 1.5850 for the fourth consecutive day. The continuing advance of the pound against the euro should be also mentioned. This cross is fluctuating around 0.8230 now, while at the end of March it was close to 0.8380. The current levels are already approaching the 0.8220 mark, where we may see an exciting battle between bulls and bears. It's really hard to find any other reason for such a striking strength of the pound besides another flight of capital from the troubled European countries into the safe currencies. Curiously enough, but in the absence of any other attractive alternative, the Europeans may turn to the sterling for this purpose. Most capital markets of Europe are too small to digest the significant capital inflows. The German manufacturing machine is stalled, being unable to pull out the periphery debtors, and Switzerland tends to fence itself from the capitals by means of minimal interest rates and linking to the euro rate. Thus, capitals flow to Britain despite the BoE's intention to continue its QE programme in the future.
USD/JPY
The USD/JPY reaction to payrolls has proved to be the strongest. Over an hour the dollar lost a point against the yen, falling from 82,50 down to 81,50, where it keeps trading now. Probably, in the course of the day the pair will manage to correct its decline, but the slightly descending trend is likely to persist. It's possible that this trend will hold good till the end of current week and the pair will go down to the 80 mark.
AUD/USD
All these peripetias with the holidays and release of US employment data led the aussie astray. The pair has suddenly stopped declining as further purchases of the US dollar don't seem to be appropriate any longer. Probably, the Aussie should take a break after a continuous fall from 1.08 to 1.0280.
