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USD Pressure Extends Following NFP, Weighed By Financial Stability Concerns

FOREX
  • Despite the February change in US non-farm payrolls beating estimates, a set of weaker components within the employment report was met with immediate USD selling. With financial stability concerns providing an uncomfortable backdrop, the greenback extended the post-Powell reversal with the USD index looking set to close in line with last week’s close.
  • With the Silicon Valley Bank situation in the back of trader’s minds, the weak details within the payrolls report saw an immediate gap lower for USDJPY from around 136.70 to 136.00. Any bounces remained small, and the resulting hours saw the pair fall to fresh lows for the week at 134.12.
  • The pair has now traded well below support at 135.37 and has briefly shown below the 50-day EMA, which intersects at 134.23. A clear break of this average would strengthen a bearish threat.
  • With the flight to quality in full force, the Swiss franc was a key beneficiary in G10 FX on Friday, with USDCHF posting 1.25% losses on the day. The Euro and GBP were also able to capitalise on the softer greenback, however, the more risk sensitive Aussie relatively struggled, posting 0.14% losses against the dollar, with AUDJPY weakness mirroring the moves in equity markets.
  • A further extension of this equity weakness approaching the close provided some moderate relief for the USD index, which looks set to close around 0.7% weaker on the session.
  • The key risk events next week are the US CPI report on Tuesday and Thursday’s ECB meeting.
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