Ahead Today
G3: US nonfarm payrolls, Germany industrial production
Asia: Indonesia foreign reserves, Malaysia industrial production, Taiwan exports
Market Highlights
US nonfarm payrolls (NFP) is due today, alongside the unemployment rate and wage growth. Markets have largely maintained their build-up of net long USD positioning into NFP, though overall positioning does not appear particularly stretched. The DXY continues to hold firm around the 98.00 level, but spot price action looks somewhat softer than implied by positioning.
Several labour market indicators point to upside surprise to April NFP, especially with consensus at a moderate +65k. Initial jobless claims eased to around 203k on average in April from 209k in March. The ADP report also showed a pickup in private sector hiring, while the ISM services employment index rose to 48.0 from 45.2 previously. NFP risks therefore appear skewed to the upside in our view, which would be USD positive.
That said, a sharp hawkish repricing of US rate expectations remains unlikely, which should help contain the extent of any dollar strength following the release.
Asian currencies extended gains against the dollar, led by PHP (+1.5%) amid de- escalation hopes and somewhat softer Brent prices. That said, fresh clashes between 3 US warships and Iranian forces in the Strait of Hormuz area could temper market optimism. Moreover, with markets awaiting signs of progress on a potential US–Iran deal and the US nonfarm payrolls (NFP) release due later today, some consolidation in Asian FX is possible.
Taiwan’s export data will be closely watched today for evidence of sustained strength in AI driven semiconductor exports. After a surge of 61.8%yoy in Taiwan’s total exports in March, April exports may not be as impressive, but should remain sufficiently firm to validate the strong performance seen in Taiwan equities. This keeps the TWD outlook constructive, with positive spillovers for tech linked Asian FX more broadly.