Last week we ended Friday with a monster jobs report out of the U.S showing that they created 272k jobs in May- this sent both GBPUSD and EURUSD lower instantly as it was a big surprise to the market- the wider implication is that the stronger the U.S economy is, the less likely a rate cut is imminent. However, after delving into the numbers, part time work was higher, with lower full-time jobs, and unemployment as a whole was higher, so I have a sneaky feeling this number may be revised at some point, it just doesn’t make complete sense to me that this number would be accurate- therefore, I would not go down the route many analysts are right now and questioning rate cuts completely for 2024 from the U.S. In The UK, the election campaigns have been heating up with debates beginning and the return of Nigel Farage to politics, I will not speculate just yet on how I see things panning out but one thing is for certain, if there is no majority then we can expect the Pound to fall- so the best outcome from a currency perspective is a majority win from either party.
In France, President Macron has announced he is dissolving parliament after suffering a defeat in European elections, right now it is too early to say much about this as it has happened as I am writing, but I would say this move potentially suggests there could be a big change in the political landscape and the generally political direction in France, will write more on this over the next week once I have more information.
As far as data goes, there are some releases this week worth keeping an eye on- Monday will be relatively quiet (Just the aftermath of EU elections to analyse)- so we will skip to Tuesday where we have UK employment data alongside average earnings being released in the morning- expectations are currently not out for this release but if I were to have an educated guess, I don’t think we will see a massive swing on this data, potentially we may see unemployment a little higher.
On Wednesday we have UK GDP numbers being released- the last release was positive, so I am expecting these to stay positive or show some sort of growth, generally in election years we do see positive data releases- this will be released alongside trade balance and industrial and manufacturing production. Later on Wednesday we have U.S inflation data coming out where we are expecting to see inflation fall to 3.5% which could weaken the Dollar slightly. Later in the evening we have the Fed interest rate decision, there is no change expected in rates however markets will be watching the Fed press conference to gauge Fed Chair Powell’s tone in regards to when he feels a rate cut will make sense. I have a feeling this particular meeting may be more dovish than markets are pricing in.
That is the bulk of important data for this week, Thursday and Friday will allow us a breather- please note I will be out of the office fromJune 17th and returning on June 24th- as ever my team will be happy to assist you while I am away, however if there is anything urgent I will be reachable on my mobile.