Asian bourses started the session on the backfoot following the faint lead from Wall Street, with traders kept a defensive positioning amid US-China tensions and Non-Farm Payroll (NFP) report. Yesterday’s price action showed some clear signs of market positioning before the US jobs data today. With players giving preference for derivatives in the FX, Bond and equity markets, hedging their portfolio risks and building their leverage bets ahead of the data. Worth keeping a close eye on how the Asia players will be trading themselves ahead of the data on risky assets but especially on the FX and Bond complex as they could react first due to its interest rate differentials sensitivity.
Today’s NFP is emphasized by solid ADP National Employment and Initial Jobless Claims data released earlier this week. May jobs data from the US is more critical than other recent macro data since it will be influential in the investor’s expectations about the timing of the Federal Reserve reducing its asset purchases program. Fed’s quantitative easing is currently running at $120 bln per month. Even if the jobs report comes solid, Fed policymakers will highlight some gaps on the job market that would still need to be closed since there are still multiple millions of workers that remain out of work compared to pre-pandemic levels.
