Stocks hit 2019 highs after strong NFP; USDCAD back near 1.34

Summary:

• NFP bounces back to hit sweet spot for Equities

• US employment change beats but wages miss

• Canadian jobs drop; USDCAD back near 1.34

• PM May seeks to extend the extension

The much anticipated US employment report has lived up to its billing with an impressive bounce back in the number of jobs added after a big disappointment last time out, while at the same time an unexpected drop in wages provides something of a sweet spot for US stocks with the S&P500 rallying to its highest level of the year. An increase of 196k jobs for March was above the +177k expected and after February’s number hit a 17 month low of +33k (revised up from +20k initially) it appears that the prior release was an anomaly rather than a warning sign. There’s been further gains for US indices with the S&P500 taking out recent highs to trade at its new 2019 peak. The market is now only 2% from it’s all-time high set back last October and with this pleasing jobs report and the promising noises coming out of US-China trade talks there’s every chance the market completes an incredible recovery in the not too distant future.   

More good news came for stock market bulls in the form of wage growth with average earnings Y/Y coming in below the forecast +3.4% at +3.2%. In M/M terms the reading was +0.1% vs +0.3% exp while the unemployment rate held steady at 3.8%. This is good news for equities as it gives the Federal Reserve more leeway with their monetary policy going forward and quite remarkably the markets are now pricing in a 75% chance of a cut in interest rates this year!   

After Canadian employment figures in February soared and even topped their US counterparts in terms of jobs added, March saw a reversion to the mean with a small drop posted. The net change in employment fell by 7.2k vs an expected rise of 6.0k, after last month saw a print of 55.9k. The unemployment rate remained at 5.8% as expected.

Theresa May has sent a letter to European Council President Donald Tusk seeking to delay Brexit to June 30, in what is a tacit admittance that the government has all but given up on passing a deal before the end of next week’s April 12 deadline. The choice of June 30 as a leave date is the same as the last request from the PM, intended to mark a leave date before the next European parliament will sit at the start of July. In terms of market moves on this news there’s been a bit of a pullback in the Pound after a foray higher earlier in the week ran out of steam but as far as most currency traders are concerned the chances of a no-deal remain remote but at the same time a satisfactory outcome anytime soon also seems highly unlikely and this is containing the pound in what is a fairly narrow trading range.