Pound Jumps, RBA. Payrolls Next

The impact of the UK election came into clear focus after the pound rallied two cents on the release of the exit poll. Earlier on Thursday, the US dollar was the top performer while the loonie lagged. Along with the election, the minutes of the JPM and RBA Statement on Monetary Policy are next. The biggest mover in our Premium Insights is the GBPAUD long, while EURGBP long has pared its gains significantly.

Cable instantly jumped to 1.5425 after the results of the only exit poll from the UK election showed the Conservatives far ahead with 316 seats compared to Labour at 239. That result would put Cameron's Conservatives just 5 seats short of a majority and with enough seats to continue the coalition with the Liberal-Democrats.

Polling had shown a much closer race and the possibility of Labour and other parties with the seats to form a coalition of their own. Even the pollsters themselves warned that the exit poll could be wrong but for now, it's all the markets have to go on. Traders will be looking for every clue in the coming hours but given the initial reaction, expect more GBP strength if the Conservative vote is confirmed.

The market will have much to digest in the hours ahead of non-farm payrolls. Economists have largely brushed aside the soft ADP reading but markets are likely to be priced below the +228K consensus. Up first are the minutes of the April 7/8 BOJ meeting. Another meeting was held after this one so don't expect much.

A larger event comes at 0130 GMT with the RBA Statement on Monetary Policy. The impression from Stevens was that rates would be on hold for a period after the latest cut but the Statement will add for more clarity and that could mean big moves for the Aussie, especially after the soft jobs report on Thursday.

We also keep a close eye on bond and oil markets. Both reversed in the past day or so and that turnaround could be a signal of a broader US dollar turnaround, especially if non-farm payrolls are strong.