Summary:

• Antipodean currencies have kicked off the new week with decent gains being propped up be increased risk appetite
• US dollar retreats after wishy-washy moves on Friday, FED’s Bullard concerns about a count of hikes this year 
• Asian stocks benefit from the reassuring US employment report 

The beginning of the new week has brought relative strength of the Antipodean currencies as both AUD and NZD are the best performing ones among their major peers. There were no specific reasons standing behind those rises, however, the tariff story could have helped the Aussie to some extent. Namely, according to Australian Prime Minister Turnbull Donald Trump was to promise him an exemption on steel tariffs calling a decision a win-win situation. While there has been no a confirmation of such an exclusion, the local dollar could be higher on this. Having said that, there is still uncertain whether Australian companies based abroad will be exempt as well. On the other hand, one cannot forget that direct trade relations between the US and China could exert an evenly significant impact on the Australian economy as it remains tied to Chinese trade. 

The Australian dollar drew a bullish engulfing pattern last week suggesting a continued rebound over the course of the next days. Therefore, bulls could take a stab at testing a crucial supply zone localized at around 0.8000 or slightly below this line. In this respect one needs to keep in mind that subsequent revelations concerning trade between the two largest economies in the world could matter for the Aussie being a possible source of risks. Source: xStation5

Although, the US employment report turned out much better than thought at least when we mean the headline (+313k new jobs created by US employers in February) the reading with regard to wage growth disappointed sending some doubts whether the Federal Reserve will be able to hike rates even four times this year. Over the weekend there was a speech of FED’s James Bullard, president of the Federal Reserve Bank of St. Louis, who argued that 4 hikes in 2018 could put downward pressure on inflation in an environment where inflation is already below the target. He alluded to the FED balance sheet run-off as it may make financial conditions, along with rate hikes, too tight to spur higher price growth the US central bank has been targeting for years. 

While the greenback has begun the new week on the wrong foot, Asian stock have been fond of the US jobs reports as it could mean the FED will be more cautious in hiking rates this year. Lower than forecast wage growth registered in the US last month could lead to trimmed expectations regarding inflation offering relief for bonds across the world. Consequently, Chinese major indices have been on the rise thus far with the Hang Seng (CHNComp on xStation5) gaining 1.8%. Having optimistic moods among Asian investors one may assume that the opening in Europe should be promising as well. 

The Hang Seng has commenced the new trading week with a meaningful bullish gap, so there is the likelihood to see the index rising toward the past bearish engulfing formation being the first hurdle for bulls to jump over. Source: xStation5