USD reverses NFP gains, falls vs most currencies

•     USD reverses NFP gains, falls vs most currencies

–    US interest rates soared on Friday, pushing USD higher; rates came back a bit yesterday and USD fell with them

–    This is the usual pattern after NFP and doesn’t mean a permanent change in direction

–    May take some time for USD to recover though as investors were very long and may be reluctant to build up long positions further

•     Abe comments boost USD/JPY

–    Says weak yen has a “positive impact” on tourism, companies doing business abroad

–    I expect he doesn’t mind a gradual weakening in JPY to support exports

•     China CPI slows to +1.2% yoy in May from 1.5% yoy in April

–    Unexpected slowdown shows industrial overcapacity and weak demand

–    Slowdown in inflation is bad for commodity price outlook = negative AUD, NZD

•     Today:

–    Eurozone: Final GDP for Q1 (preliminary estimate:  +0.4% qoq)

–    UK:  trade data for April = deficit is expected to narrow to GBP 2.6bn from GBP 2.8bn

–    US: NFIB small business optimism for May (expected: 97.2 vs 96.9); JOLTS job openings (expected: 5.044mn vs 4.994mn)