Markets continue to shun Sterling.

US non-farm payrolls increased 428,000 for April which was the same increase as reported for the revised March data and slightly above consensus forecasts of 395,000. Manufacturing payrolls increased 55,000 on the month and there were net increases across all major job sectors.

The unemployment rate held at 3.6% for the month and slightly above market expectations of 3.5%. There was a decline in the participation rate for the month and the household survey recorded an employment decline of over 350,000 on the month which will cause some unease within the Federal Reserve amid concerns over a lack of labour supply.

Average hourly earnings increased 0.3% on the month, slightly below expectations of 0.4% with a year-on-year increase of 5.5% from 5.6% previously.

After a limited decline following Chair Powell’s comments on Wednesday, US yields moved sharply higher on Thursday.

The US jobs data did not disrupt expectations that the Fed would sanction another 50 basis-point rate increase at the June meeting.

The 10-year yield increased to highs near 3.15% and the highest level since early December 2018 amid fears over increased inflation pressures.

US equites attempted to rally at times on Friday, but eventually came under further selling pressure amid fears over higher yields and a tightening of financial conditions. The S&P 500 index declined sharply to near 12-month lows.

Unease over the Chinese outlook also continued to underpin the US dollar on defensive grounds with the currency index strengthening to a fresh 20-year high.

Bank of England chief economist Pill confirmed that two members did not sign up to the BoE’s guidance as they considered that enough may have already been done. He added that the bank should no over-respond to short-term developments or be over-aggressive with policy moves.

The latest CFTC data recorded a further net increase in short Sterling positions to near 74,000 contracts and the largest short position since October 2019 as global speculators maintained a negative stance.

UK local election and Northern Ireland Assembly results reinforced domestic political concerns.

The latest Canadian labour-market data recorded an employment increase f just over 15,000 for April compared with expectations of an increase close to 40,000, although the unemployment rate met expectations with a marginal decline to 5.2% from 5.3% previously.

The US employment report had only a limited direct impact with little change in the underlying US narrative. US bond yields continued to move higher with a fresh 3-year high near 3.15% for the 10-year yield.

Euro-zone confidence remained vulnerable, especially fears over the Ukraine situation. EUR/USD settled just below 1.0550 on Friday with a fresh retreat to near 1.0500 on Monday despite some resilience on the crosses.

Higher US yields undermined support for the yen. USD/JPY posted a net gain to around 131.00 and only just below 20-year highs.

The franc traded more on yield considerations as opposed to risk appetite. USD/CHF posted fresh 26-month highs near 0.9950.

Sterling failed to secure move than a limited technical correction, especially with unease over the Northern Ireland and Brexit. GBP/USD dipped back below the 1.2300 level against the dollar on Monday and close to 22-month lows. GBP/EUR dipped towards 1.1650.

Commodity currencies failed to hold intra-day highs on Friday and were subjected to further selling on Monday as risk appetite deteriorated further. AUD/USD retreated sharply to 3-month lows at 0.7000. USD/CAD traded above 1.2900 and close to 1.2950 on Monday.

Economic Calendar

13:30CAD Building Permits (M/M)(MAR)21.00%
23:45NZD Electronic Card Retail Sales (Y/Y)(APR 01)-0.50%
23:45NZD Electronic Card Retail Sales (M/M)(APR 01)-1.30%

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.