Euro inflation surges to record highs.

US non-farm payrolls increased 431,000 for March which was below consensus forecasts of 490,000 for the month, but the February increase was revised higher to 750,000 from the first estimate of 678,000.

Manufacturing jobs increased 38,000 on the month while the increase in government jobs was held to 5,000.

The unemployment rate declined to 3.6% from 3.8%, slightly below consensus forecasts and the lowest rate since February 2020. The household survey also recorded a small increase in the participation rate and an increase in the number of employed of over 730,000.

Average hourly earnings increased 0.4% on the month with the year-on-year increase at 5.6% from 5.2% and the highest rate since May 2020, which tended to increase expectations over higher underlying wages growth.

San Francisco Fed President Daly stated that the case for a 50 basis-point in May has grown given recent inflation and labour-market developments. New York head Williams added that the balance-sheet run-off could also start next month.

Markets remain more confident that the Fed will go for a 0.50% hike at the May meeting.

Euro inflation surges to record highs

The Euro-zone CPI inflation rate surged to a fresh record high of 7.5% for March from 5.9% the previous month and well above consensus forecasts of 6.6%. The core inflation rate increased to 3.0% from 2.7% and slightly below market expectations of 3.1%. The inflation data will maintain pressure for a response from the ECB.

The CFTC data recorded a further substantial increase in short yen positions to over 100,000 contracts in the latest week and the most substantial short yen position since November 2021 as the yen slide encouraged further selling.

The extended short position will maintain the potential for very volatile yen moves.

Within Ukraine most attention has focussed on allegations on war crimes from Russian forces in the Kyiv area, especially in Bucha. Germany has stated that there will be additional sanctions on Russia and developments surrounding energy exports from Russia will continue to be watched very closely.

The Reserve Bank of Australia (RBA) rate decision will be announced on Tuesday with rates expected to remain at 0.1%.

Forward guidance from the bank will be watched closely within the statement with a particular focus on the commentary on inflation rhetoric.

The Euro was unable to gain support from the higher-than-expected Euro-area CPI inflation data. Ukraine developments with no headway in peace talks also limited potential Euro support amid a focus on allegations of Russian war crimes. EUR/USD retreated to around 1.1035 at the European close on strong jobs data before settling just below 1.1050 on Monday.

US yields failed to hold intra-day highs posted after the US jobs data with the 10-year yield settling around 2.41% on Monday. USD/JPY posted strong gains to just above 123.0 before consolidation around 122.70.

Sterling was unable to make any headway as UK economic reservations continued. GBP/USD did trade just above 1.3100 on Monday with EUR/GBP around 0.8420.

The Swiss franc was resilient with limited net USD/CHF gains to 0.9260. Commodity currencies were hampered by a firm US dollar, but with buying on dips. AUD/USD did trade back above 0.7500 on Monday. USD/CAD traded just above the 1.2500 level as oil prices remained on the defensive with the Bank of Canada business outlook survey on Monday.

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