XE Market Analysis: Asia - Apr 02, 2021

FX trade was thin in N.Y. on Friday, as Europe and Canada were out for Good Friday. The Dollar did move modestly higher through the shortened session, aided by the solid non-farm payroll spike of 916k, versus the 613k consensus. Earnings disappointed, falling slightly, while the workweek rose more than expected, and the unemployment rate was in-line with expectations dipping to 6.0% from 6.2%. The jobs report reinforced the bullish outlook on the recovery as the labor market picked up steam. Treasury yields continued to cheapen across the curve thanks to the all-around strength in the jobs report, which was supportive of the USD.

[EUR, USD]
EUR-USD remained on a softer footing in the aftermath of the blowout jobs report, down from pre-release levels around 1.1780, since dipping to 1.1750. Super-thin conditions prevail, with Europe and Canada closed for Good Friday. Activity is likely to slow into midday, with the bond market closing at noon, and Wall Street closed. Thursday's 1.1713 low is the next EUR-USD support level.

[USD, JPY]
USD-JPY rallied from overnight lows of 110.37 to 110.55 ahead of the jobs data. From there, the USD has turned broadly higher after the jobs report, seeing USD-JPY top so far at 110.75. Firmer Treasury yields have been supportive of the pairing, though given the lack of participation this Good Friday, recent highs are likely to stand, with the 111.00 mark seen as solid resistance.

[GBP, USD]
GBP-USD topped at 1.3843 after the U.S. employment report, later making its way to 1.3814 in thin trade. With London on holiday, liquidity was at a premium, though the Dollar managed broad, if modest gains into the early close. Improving economics in the U.K, along with the efficient Covid vaccine rollout there, should continue to underpin the Pound generally.

[USD, CHF]
The SNB maintained its expansionary policy stance. The statement stressed that the pandemic "is continuing to have a strong adverse effect on the economy", adding that despite the "recent weakening, the Swiss franc remains highly valued" and against that background the policy rate was held at -0.75% and the bank stressed that "it remains willing to intervene in the foreign exchange market as necessary". The bank will also continue to supply the banking system with liquidity on "generous" terms. Nothing really new there, despite the fact that the SNB lifted its conditional inflation forecast on the back of higher oil prices and a weaker CHF. However, the new forecasts, which project average price increases of 0.2% this year, 0.4% for 2022 and 0.5% for 2023 are clearly nothing that would force the SNB to abandon the very expansionary policy. Looking forward the SNB's baseline scenario expects a gradual easing of virus restrictions in coming months and the forecast for overall growth this year remains at 2.5-3.0%. However, the SNB highlighted ongoing uncertainty, and warned that against the background of ongoing increases in mortgage lending and residential property prices this market remains vulnerable and "continues to present a risk for financial stability"

[USD, CAD]
USD-CAD was choppy in extremely thin trade, as Canada was absent due to the Good Friday Holliday. The pairing started the session near 1.2560, headed to 1.2575 highs immediately following the U.S. employment report, before falling to 1.2540, then heading back to 1.2570, Oil futures were closed, which took away one usual driver of USD-CAD direction. The Greenback eventually responded positively to the solid U.S. jobs report.