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US markets opened on Monday after a holiday break to the news of a resilient US labour market after a beat in the NFP figure released on Friday.
Nonfarm payrolls grew by 236,000 for the month, above the 228k expected, while the unemployment rate fell to 3.5%, where a hold of 3.6% was expected.
This saw rate hike expectations from the FOMC at their May meeting move up to a 70% chance according to Fed Fund Futures pricing, which put equities under pressure early in the session.
The Dow Jones found support at its 100 day Moving average and pulled higher, finishing the session up around 100 points.
In FX the rise in rate hike expectations saw the US dollar rally against its peers with broad dollar strength across all pairs.
The Japanese Yen saw notable weakness after Friday’s jobs report, safe haven flows to the Yen were reduced and higher yield differentials also pressured the Yen. Adding to this was comments from the new BoJ governor Ueda warning against a sudden normalisation of policy, i.e. continuing with the dovish status quo, all this together saw the USDJPY surge higher, hitting one month highs intra session.
Geopolitical risks around reports of Chinese military drills around Taiwan also saw notable weakness in cyclical currencies, particularly the AUD and NZD, AUDUSD falling to 0.6625 before finding support at the late March lows, and NZDUSD dipping below 0.62 and the AUDNZD treading water at the psychological 1.07 level.
Gold prices were under pressure from a stronger Dollar and rising yields pushing decisively below the 2000 USD an ounce level to 1990
Crude Oil was down modestly , still holding its gains from the OPEC+ surprise output cut and continuing to trade in a narrow range to range trade.
In scheduled economic announcements today, we have a fairly quiet calendar ahead of a very busy few days starting the US CPI figure tomorrow. Todays only notable figures being Chinese CPI and European retails sales, both of which are not expected to have much of an impact on the markets.
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