NFP s robust as Chinese data disappoints

The FX markets are trading this morning very much where we left them at the close on Friday following a robust NFP reading of 236k with the unemployment rate dropping to 7.736% from 7.923% in January. The USD surged across the board with USD/JPY making a fresh yearly high of 96.55 and cable making a new low of 1.4885. The negative from the report was the revision to the January release with the 157k reported revised down to 119k leaving the three-month average unchanged at 191k. I don’t think this report changes the timing of the end to US stimulus measures or ‘tapering’ with Bernanke and ultra dove Janet Yellen both signalling last week that purchases will continue at their current pace with the Beige book also revealing a similar picture of a ‘modest recovery’.

Chinese data released over the week-end showed a mixed picture with the headline CPI coming in at 3.2% versus expectations of 3% but the components showed disappointing readings on industrial production and retail sales although the market seems to have mainly ignored these numbers sighting Chinese Lunar holiday distortions.

In other news ratings agency Fitch downgraded Italy sovereign rating but the reaction in the market was minimal as this had been widely expected and an advisor to PM ABE commented that Japan could forgo the 2% inflation target if the growth recovery is achieved.

Not much in the way of data releases today with the focus this week for me being the US retail sales on Wednesday followed by the Australian jobs report on Thursday although the latter will need to be very out of the consensus range to break the 1.0150-1.0350 range.

For now the trend seems very much intact buy USD’s wear diamonds!

EUR/USD

Supports 1.2980-1.2955-1.2890 | Resistance 1.3025-1.3060-1.3125

USD/JPY

Supports 95.85-95.50-95.20 | Resistance 96.25-96.60-97.25

GBP/USD

Supports 1.4885-1.4850-1.4805 | Resistance 1.4945-1.4980-1.5075