The USD Is Steady Despite the Terrible US Labor Market Data (Weekly Review)

No doubts the most anticipated event of the past week was the release of the US Unemployment Rate and Nonfarm Payrolls. Along with quarantine measures undertaken by the country's authorities, a large-scale decrease in the number of employees and a significant increase in unemployment were expected, and the data matched the expectations – unemployment rate in April jumped to 14.7%, not reaching the forecasted value of 16.0%, and employment rate amounted to -20500000 against the forecasted -22000000.

Since market participants were ready for such very terrible labor market indicators, their reaction was rather sluggish, and the loss of the USD as a whole was insignificant. The EUR and the GBP strengthened, but their achievements were made thanks to profit taking, and not a change in the attitude of speculators to both these currencies and the USD. The AUD, however, was in demand all week, due to some optimism amid countries restarting their economies after quarantine.

Positive dynamics was also observed in the oil market, and its quotes were able to win back another part of the losses incurred earlier. Although at this stage one should not expect a repeat price fall to negative values, the further advancement of futures is higher without factors such as the resumption of flights, the use of personal transport, and the reduction in world reserves, is also doubtful.

Schedule for this week:

Monday, May 11 
10:45 GMT - Eurozone. ECB's Mersch Speaks.

Tuesday, May 12
01:30 GMT - PRC. Consumer Price Index (CPI);
08:30 GMT - Australia. Budget Release;
12:30 GMT - USA. Consumer Price Index (CPI);
12:30 GMT – USA. Core Consumer Price Index (CPI).

Wednesday, May 13
01:30 GMT - Australia. Wage Price Index (QoQ) (Q1);
02:00 GMT – New Zealand. Reserve Bank of New Zealand (RBNZ) Interest Rate Decision;
02:00 GMT - New Zealand. Reserve Bank of New Zealand (RBNZ) Rate Statement;
03:00 GMT - New Zealand. Reserve Bank of New Zealand (RBNZ) Press Conference.
06:00 GMT – United Kingdom. GDP (MoM) (Mar);
06:00 GMT - United Kingdom. Industrial Production;
06:00 GMT - United Kingdom. Manufacturing Production;
12:30 GMT - USA. Producer Price Index (PPI), excluding food and energy.

Thursday, May 14
01:30 GMT - Australia. Employment Rate;
01:30 GMT - Australia. Unemployment Rate;
01:30 GMT - Australia. Participation Rate;
06:00 GMT - Germany. Harmonised Index of Consumer Prices (HICP);
12:30 GMT - USA. Initial Jobless Claims.

Friday, May 15
06:00 GMT - Germany. GDP;
09:00 GMT - Eurozone. Employment Rate;
09:00 GMT - Eurozone. GDP;
13:15 GMT - USA. Industrial Production;
14:00 GMT - USA. Michigan Consumer Sentiment.

Author: Anthony Porter, IAFT Analyst