April's unemployment rate eased to 8.1%, but it was a mainly because of people leaving the workforce.


The Non-Farm Payroll data came out 115K, disappointing a 173K forecast which the market has been scaling back throughout the week. March data was revised from 120K to 154K. Although the data came out very weak, the market seems to have been prepared for this disappointment, and the reaction in the currency market was not clear at first.


Source for the charts from the Bureau of Labor Statistics: http://www.bls.gov/home.htm

2 straight months of weak employment data adds to probability of QE. This could be a reason the USD is being pressured, although risk aversion should boost the USD.So USD direction is not clear.

The clearer reaction is coming from the commodity currencies like the AUD and NZD, which are sliding. The market is also reacting with clearer JPY-strength.

AUD/USD was just above a consolidation support ahead of the Non-Farm Payroll. After the poor data, it has some initial knee jerk reaction, then settled to the downside, sliding below the 1.0225 support pivot. The 1.02 handle will be a psychological support. Below that we open up 1.0150 and 1.00(parity) in the coming week. There might be a pullback first before these bearish targets are high. If the 1.0225-1.0245 support area becomes resistance, we will have a convincing clue for the bearish scenario.

AUD/USD 1H chart 5/4/2012 10:20AM EDT


NZD/USD is also falling further after the NFP. The 0.7875 level is the next pivot, and the range breakout target is 0.7840. However, the market is a bit over sold at the moment, and we can expect some pullback before the market pursues these bearish targets in the coming week. A pullback that does not break above 0.81 would be a good sign for the bearish intent.

USD/JPY falling below 80.00. 79.50-79.60 is the short-term target and support area. Below that, the next key support is at the 78.30 level.This bearish outlook can get further confirmation if a pullback stays below 80.00. If the market is to bottom out, it needs to rally above 80.60.

USD/JPY 1H chart 5/4/2012 10:24AM EDT


AUD/JPY is sliding sharply as the Aussie is weak and the JPY is strong.It has broken below a rising trendline this week, and extension to the downside opens up 80.00. 80.06 is 61.8% retracement of the 74.78 to 88.59 rally. Also a breakout target points to about 80.10.

AUD/JPY 1H chart 5/4/2012 10:25PM EDT