A Season(al) to Remember

The calendar rolled over on Thursday and there are some seasonals to keep in mind. Trading was sapped by the May Day holiday and changes were less than 20 pips but NZD led while AUD lagged. With traders returning on Friday the moves could pick up with Aussie housing data and Japanese jobs on the calendar. 

The market took little from the full slate of economic data. Initial jobless claims were weak but Easter probably skewed the numbers. The ISM manufacturing index was a touch strong but it was priced in after the Chicago PMI.

The surprise market mover was March construction spending at 0.2% compared to 0.5% along with a downward revision to the prior. The dollar slid afterwards and several firms lowered Q1 GDP forecasts into negative territory.

There are signs of a pickup as March consumer spending was a strong point of the PCE report but there's no evidence of the quick rebound many envisioned a month ago. One place US dollar strength could come from is seasonals. May is the best month of the year for the dollar index over the past 10 years and second best over the past decade. Another trend to watch is for commodity currency weakness. May is one of the weaker months for AUD, CAD and NZD but the past four years have been especially poor with AUD averaging a 6.4% decline in that period.

The final seasonal trend to watch is euro weakness. Ultimately fundamentals trump everything else but May is by far the weakest month for the euro and hints at a rate cut from Draghi would certainly help the case.

The calendar is steady in Asia ahead of non-farm payrolls but three events are notable. First is the 2350 GMT release of the March Japan jobs report, there's always the chance of a surprise after the tax hike but the consensus is for no change in the 3.6% unemployment rate.

At 0100 GMT, it's HIA Australian home sales. The industry is under some scrutiny for overvaluation. Thirty minutes later the Australian Q1 PPI report is due and expected to show prices 2.2% higher y/y.