Traders seem willing to test the USD's upside after jobs data

- Forex: The USD continued to benefit from the momentum created after Friday's better-than-expected jobs data. Near-term federal funds futures show a 12% probability for a rate cut at the June 27-28 FOMC meeting, giving the USD a short-term boost. It seems that traders are willing to try and test the USD's upside. The consensus is that the Fed is willing to leave rates unchanged for now, but is flexible enough to raise rates should the threat of inflation increase. A few analysts expect Europe's economy to lose momentum, and some suggest a lot of the bad news in the U.S. economy is out of the way. This idea seems to be in conflict with news over the weekend that the German government will lift its 2007 GDP forecast from its current 1.7% estimate. EUR/USD's performance last week was not inspiring, ending at 1.3378 to end the week almost flat, with bearish divergence conditions now being displayed in 4 hours MACD and RSI. The GBP/USD continued to trade lower after the short term rising channel support was taken out on Friday. After consolidating for the past few weeks, USD/CHF is testing cluster resistance at 1.2228/30. Some analysts suggest that a convincing USD/CHF break of this resistance will indicate that the price action from 1.2029 is developing into stronger rebound. In other fixed income news, JGB 10yr yields hit 1.7% and June JGB futures hit a 3mnth low in the aftermath of the U.S. jobs data.

- Equities: The Nikkei rallied on the U.S. jobs data, hitting a 5-week high as traders bought exporters. Traders are likely to turn cautious ahead of the upcoming earnings season, as Japanese corporate earnings forecasts for the current fiscal year will likely be below analysts' projection (many firms are expected to turn conservative due to fear of a U.S. slowdown). South Korean shares hit a new record as transport and shipbuilding firms pushed shares higher. Despite the stronger-than-expected U.S. jobs data, South Korean exporters traded lower as traders turned cautious ahead of earnings to be released later this week. Traders said that liquidity is improving in South Korean equity markets as foreign investors are buying heavily (strong foreign buying has been a key factor behind the KOSPI's push to new record highs). LG Phillips shares trades down sharply in Seoul after a bond issuance, as investors worry over the company's ability to service its debt. Elsewhere in Asia, the Singapore stock index hit a new record high.

- Commodities: Oil traded lower despite speculation that Iran's president is to disclose news about Iran's nuclear program when he visits an uranium enrichment facility on Monday. Ahmadinejad said in February he would announce "great" nuclear achievements in the days to April 9. Iran's Jam-e Jam newspaper reported on Sunday "the installation and start up of 3,000 centrifuges and the injection of uranium hexafluoride (UF6) gas will be announced by the president." Iran's OPEC Minister reiterated over the weekend that the market is "well supplied". Shanghai copper traded higher after the stronger-than-expected U.S. March payroll data Friday hinted at strong U.S. demand, which means more gains in LME 3-month copper ahead. Chinese gold production climbed during Jan-Feb (China Jan-Feb gold output 36.18 tons (+14.34% y/y))