Cautious start to the week ahead of Fed Loan Officer Survey

Fueled by the decisive rebound seen in banking stocks on Friday, Wall Street’s main indexes turned north and ended the week on a bullish note. Early Monday, markets seem to have turned cautious as attention shifts to the US Federal Reserve’s Senior Loan Officer Opinion Survey, which could provide fresh clues regarding how tight financial conditions are. Sentix Investor Confidence data for May will be featured in the European docket and investors will also keep an eye comments from central bank officials.

On Friday, the US Bureau of Labor Statistics reported that Nonfarm Payrolls rose by 253,000 in April, surpassing the market expectation of 179,000 by a wide margin. On a negative note, March’s 236,000 increase got revised lower to 165,000. The Unemployment Rate ticked down to 3.4% in the same period and the annual wage inflation edged higher to 4.4% from 4.3%. Although the initial reaction helped the US Dollar find some demand, the risk-positive market environment caused the US Dollar Index to erase its recovery gains.

EUR/USD closed the previous week virtually unchanged slightly above 1.1000. The pair stretches higher toward 1.1050 in the European morning on Monday.

GBP/USD gathered bullish momentum and advanced to its strongest level in nearly a year above 1.2650 late Friday. The pair stays relatively quiet early Monday and fluctuates at around that level.

Following the sharp decline witnessed in the first half of the previous week, USD/JPY closed the last two days in positive territory. The pair, however, struggled to stabilize above 135.00 and retreated below that level in the Asian trading hours on Monday. Earlier in the day, the data from Japan revealed that the Jibun Bank Services PMI improved to 55.4 in April, compared to the market expectation of 54.9.

After spiking to above $2,070 on Thursday, Gold price staged a deep technical correction on Friday as the benchmark 10-year US Treasury bond yield retraced a portion of its weekly decline. Nevertheless, XAU/USD holds comfortably above $2,000 after having failed to clear that level several times since mid-April.

USD/CAD lost nearly 200 pips on Friday amid a strong rebound in crude oil prices and the upbeat April jobs report from Canada. The pair was last seen trading in negative territory at around 1.3350. Meanwhile, the barrel of West Texas Intermediate is already up 1% on the day slightly above $72 after having gained 4% on Friday.

AUD/USD trades at its highest level in nearly a month and closes in on 0.6800 early Monday after having registered gains every day last week. First-quarter Retail Sales data from Australia will be released in the Asian session on Tuesday. Trade Balance data from China will also be watched closely by market participants.

Bitcoin reversed its direction following Friday’s rebound and closed in negative territory on Saturday and Sunday. BTC/USD stays on the back foot and declined toward $28,000 early Monday. Ethereum lost nearly 6% over the weekend and broke below $1,900 before going into a consolidation phase to start the new week.