FOREX
The US dollar is trading flat against other major currencies as the European session gets underway. The greenback was on the back foot on Thursday, following the US Congress approval of the debt ceiling bill. The dollar is a haven asset, meaning it does well during uncertain times, and the possibility of the US defaulting on its commitments was one such moment, driving an increase in dollar demand. With the turning of that page, currency traders shifted the focus to the release of the May jobs report, which comes out this afternoon and could help to determine the Federal Reserve's monetary policy during the second half of the year. If the number of new jobs created in May surprises to the upside, which in this case will be anything above 180,000, there will be a greater likelihood of the Fed deciding to hike interest rates again when it next meets on June 14. Conversely, a disappointing figure will make it harder for the members of the FOMC to vote in favour of a rate hike. Against this background, the dollar’s short-term direction hinges on today’s jobs report.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
EUROPEAN SHARES
Equities continued to climb higher at the beginning of the last trading session of a volatile week for traders, as market sentiment strengthened ahead of today’s highly awaited US NFP report.
Investors have welcomed the positive developments surrounding the US debt ceiling issue after the deal passed through Congress shortly before the deadline.
Traders are now bracing for today’s batch of macro data, with the US still in focus amid expectations that the new NFP report and the unemployment rate for May, will both show less resilience from the job market.
These data will likely significantly increase market volatility in the afternoon as they should give investors more clues on what to expect from the Fed regarding its next move on its monetary stance. Better data than expected could be “bad news” for equity traders as it should provide the Fed with more room for monetary tightening to combat inflation further. On the other hand, if data comes out worse than expected, it could significantly increase bets of a dovish pivot from the Fed, lifting appetite for risk higher.
Pierre Veyret– Technical analyst, ActivTrades
Source: ActivTrader
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