Risk-on Drove US Equities to New Highs, Aussie Retrace On Sluggish Retail Sales Report - 6.5.2013

The US equities advanced on Friday due to stronger than expected jobs creation, the S&P 500 advanced to record high and closed at 1,614.42, Dow Jones Industrial rose to record new high and closed at 14,973.96 and NASDAQ closed as well in green by gaining 1.14%, at 3,378.63. Non-Farm Payrolls increased by 165K in April up from revised 138k in March and were higher than anticipated number of increase at 146k improving investor’s risk sentiment. In addition the Unemployment Rate unexpectedly dropped to 7.5% in April from 7.6% the previous month. Nonetheless later on Friday US session the ISM-Non Manufacturing PMI reported lower than estimated at 53.1 for April, down from 54.4 in March, containing risk-on. The US dollar index on Friday jumped to resistance 82.48 after job report but quickly returned back to support at 81.94 as investors were looking for higher yielding currencies, steadily trading early on Monday around 82.10.

The Aussie against the greenback climbed to cap at 1.0320 on Friday as risk sentiment improved however early today the Aussie opened heavier as disappointing Retail Sales data weighed on the currency. Monthly Australian Retail Sales dropped by 0.4% in March against expectations of 0.2% increase and much lower than February increase of 1.3%, the currency pair is still sliding and as of writing declined to 1.0271.

The EURUSD following US jobs and ECB rate cut on Thursday, remains today in 1.3138/1.3101 recently tight range, trading in neutral bias while technically we expect prices to become heavier as recent last upside found resistance at the 50.0% of 1.3704 to 1.2753, at 1.3238. The USDJPY is steadily advancing after finding support at 96.99 on Friday and is currently trading at 99.36 approaching a more than 4-year high at 99.87. Investors will be watching today PMI releases, tomorrow morning RBA key rate decision expected to be maintained at 3% and on Thursday BOE monetary policy decision with asset purchases size expected to remain at £375B and key rate at 0.50%.