A beat on US NFP data spurs markets higher despite trade tensions

The new week begins much the same as the old one ended, with markets in risk on mode, equities markets higher, while gold moved down. The USD is weaker against all currencies expect the yen. The mood is mainly positive due to better US job creation seen in the NFP data which has carried stocks higher despite headwinds such as escalating trade disputes between the US and a plethora of other countries. Canadian PM Trudeau has called the imposition of US trade tariffs on Canadian products an affront and announced retaliatory measures. China said it would tear up any trade deal with the US if they impose tariffs against China. The risk is that sentiment shifts and catches traders off balance as volatility increases. AUD outperformed today as data beat across the board with AUDUSD up 0.77% to 0.76230.

UK Markit Manufacturing PMI (May) came out at 54.4 against an expected headline number of 53.5 and 53.9 prior. The data beat the consensus and the previous number but remains weak following the high created in December at 58.2. New order inflows, strengthening job creation and demand were factors in the outperformance. EURGBP fell from 0.87996 to a low of 0.87854 following this data release.

US Non-Farm Payrolls (May) came in at 223K against an expected 188K from a prior 164K which was revised down to 159K. This measures the change in the number of employed people in May and shows a strong beat despite the revision in the prior data. The Unemployment Rate (May) was 3.8% against an expected 3.9% with a prior reading of 3.9%. Average Hourly Earnings (YoY) (May) was 2.7% against an expected 2.7% against 2.6% previously. Average Hourly Earnings (MoM) (May) was 0.3% against an expected 0.2% from 0.1% previously. Labour Force Participation Rate (May) was 62.7% against an expected 62.6% from a prior reading of 62.8%. This data shows that there has been an increase in earnings but it has still not accelerated past 0.3%. This would lead to an increase in inflation which markets have reacted negatively to recently. GBPUSD rallied from 1.32832 to a high of 1.33370 after these data releases.

At 13:30 GMT, Canadian Markit Manufacturing PMI (May) was 56.2 against an expected 55.4 from the previous 55.5. This data has exceeded the peak from February of 55.9, when it matched the April 2017 number. The last four readings have shown a softening in the data setting expectation for this reading to fall again but the unexpected beat sent the USDCAD price lower to support at 1.29581 before recovering to 1.29842 after the data release.

EURUSD is up 0.33% overnight, trading around 1.16961.

USDJPY is up 0.13% in the early session, trading at around 109.639

GBPUSD is up 0.22% this morning trading around 1.33721.

Gold is down -0.11% in early morning trading at around $1,291.55

WTI is unchanged this morning, trading around $65.75