Subdued trading could trigger FX volatility with Non Farm Payrolls

The FX markets are trading in a holiday subdued fashion ahead of the release of the US jobs report at 1.30pm. Liquidity remains at a premium with the majority of market participants celebrating the Easter holidays. FX positions were paired back yesterday afternoon ahead of the jobs release which could spark forex price volatility if the data is confirmed to be significantly away from the consensus forecast.

The last FOMC decision suggested the market should give the US jobs report a higher value rating when looking for a change in monetary policy compared to other data releases. The consensus forecast is for a rise of 245k in non farm payrolls with the US unemployment rate set to remain at 5.5% and average hourly earnings are expected to rise 0.2%.

Forecasts remain at elevated levels after the four week average of jobless claims rising from to 305k and despite ADP employments gains coming in below consensus at 189k which is the smallest increase since last May. The manufacturing surveys out earlier this week also showed a decline in employment, although this data could be distorted by the adverse weather in the US as March also saw much colder than usual temperatures. The wage growth component will again be of high importance following the Fed Chair Janet Yellen referring to normal growth being between 3-4%.

In other news the pound has failed to react to the first UK election TV debate with the polls giving a mixed verdict with early support seen for some of the minority parties. The service sector PMI data was released from Japan overnight at its lowest reading since last May at 48.4 as the unofficial HSBC China service PMI data showed an encouraging reading of 52.3.

EUR/USD
Supports 1.0715-1.0615-1.0580 | Resistance 1.0975-1.1080-1.1170

USD/JPY
Supports 119.40-118.20-116.70 | Resistance 120.60-121.55-122.45

GBP/USD
Supports 1.4810-1.4740-1.4635 | Resistance 1.4990-1.5030-1.5170