08.05.202009:50 Forex Analysis & Reviews: NFP is unlikely to have a significant impact on the markets, but the general positive mood will push down the dollar (a decline in USD/CAD and EUR/JPY pairs is expected)

The issue of aggressive claims by the United States and Europe against China has faded into the background, but is unlikely to completely disappear. It will pop up and continue to excite financial markets, which are trying to assess prospects of not only individual economically important countries, but also the world economy as a whole.

The markets shifted their attention from the topic of China's "guilt" over COVID-19 to the results of the gradual withdrawal of countries affected in large part by the coronavirus from quarantine measures. Of course, the results of this will become noticeable by the end of the second quarter, but the emerging economic statistics from the PRC are already starting to please. The export and import volumes presented on Thursday, as well as the trade balance, have already led to a recovery in demand for risky assets in the markets. We believe that the first signals of the same process in the US and Europe will cause increased demand for stocks of companies. In this case, the weakening of the US dollar will only increase.

Today, the focus of the market will be the publication of employment data in America. Investors are not deceived and understand that they will be extremely negative and even, as expected, will be significantly worse than what was once during the Great Depression in the 30s of the last century. According to the consensus forecast, the US economy will lose 22 million jobs in April against the March value of minus 701,000. Thus, unemployment is expected to rise to 16% from 4.4%.

Slightly better or, on the contrary, slightly worse values will not change the situation in the market as a whole. In our opinion, attention will be drawn to the values of the average hourly wage, which should add 3.3% year-on-year against 3.1%, and maintain the growth rate of 0.4% in April.

How can the market react to this data in general? As mentioned above, we should not expect significant movements in the currency market, although locally, if the number of new jobs or the value of unemployment is slightly better – this may encourage continued purchases of company shares and after increasing demand for risk, the dollar will be under pressure, primarily continuing its decline against commodity and commodity currencies.

Forecast of the day:

The USD/CAD pair is trading below the level of 1.3945. If it consolidates below this level, then it will continue to decline to 1.3860 against the background of growing demand for oil and risky assets as a whole.

The EUR/JPY pair is in a downward trend and remains vulnerable to growth. We believe that if it does not rise above the level of 115.45, it will resume declining to 114.40.