The first Friday of the month and we all know what that means. US Non-Farm Payroll data. Not much to report before the number but it does get released against a backdrop of two very weak ISM numbers over the past couple of days.

Equities had suffered and early week rout but bounced back a little in the belief that poor data will mean more rate cuts. Before the data, we had EURUSD at 1.0980, USDJPY 106.75 and GBPUSD 1.2310. XAU sat at $1,506 and equity futures were all in the red, the DJ showing -70.

So what did we get? The headline number came in at +136k, marginally lower than expected but there was an upward revision to last month’s number.

The ‘surprise’ was a reduction in the unemployment rate to 3.5%, which is the lowest level for 50 years. How did the markets react? In short, with relief. No one wanted to see another weak number this week.

Equity futures rallied with the DJ +60. USDJPY bounced to 107.13 and EURUSD dropped to 1.0957. XAU initially rallied to $1,515 before sliding to $1,496. Us equities open up and the DJ immediately jumps to +150. A comment from Trump advisor Kudlow that there could be some positive surprises from next week’s trade talks with China is largely ignored.

The markets are a little weary of rhetoric from the Trump administration it would seem. However, as the day progresses, equities start to get ahead of steam and by the close, the DJ is up 1.4% or 372 points.

The S&P and Nasdaq make similar gains. For FX though, it’s a more muted affair with EUR closing around 1.0980 and USDJPY 106.90. XAU slips lower but holds above $1,500 to end at $1,503.50.

And our beloved crypto ends the week on a sour note as the weekend sellers appear sending BTC back to $7,875 and ETH to $169.

To conclude it’s been quite the rollercoaster of a week for equities but the NFP number was the ‘Goldilocks’ number the market needed.

Mixed data and the rollercoaster in the equities market have been the main drivers for FX this week. So I figured it was worth a quick look at the S&P on a 2H chart.

We have generally been rallying all year off the lows in late December 2018. But as you can see, since February we have a strong trend line that has held some of the deeper pullbacks, including the one earlier this week.

To the topside, the 3030 high from July held strong in September. So it’s a case of which come comes first, making a new high or breaking down through that trend line. Technicals aside, one has to admire the equity market’s resilience despite all the politics, trade wars and rhetoric.

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David Hannigan
Author

A graduate of the Cass Business School, Dave's career began with Credit Suisse as an Equity Options Trader on the London Stock Exchange, before moving into the world of FX with Chemical Bank and Citibank. 1994 saw him join National Australia Bank, first as a Senior Dealer, then Senior Vice President and Chief Dealer.

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