The dollar is little changed against the euro and sterling from where it was this time yesterday morning, having attempted to retrace its post-Fed meeting dip in the intervening period, trading at around $1.0730 and $1.2540 ahead of the key US employment (payrolls) report later today. The euro-sterling cross remains tightly rangebound trading at about 85.5p.
Yesterday’s Events
In government bond market, US 2- and 10-year yields both rose by around 6bps as rate cut expectations US bond yields have fallen further as rate cut expectations firm a bit more following the Fed meeting – the market is now fully pricing in a quarter-point reduction in November – with both 2- and 10-year yields 5-6bps lower at the close, while equivalent German and UK yields have also been tracking lower. Meanwhile, US equities had a solid session, gaining almost 1%, with better than expected results from Apple after the close likely to add to the positive sentiment today.
ECB’s Stournaras – one of the most dovish members – says “we now consider three (interest) rate cuts in 2024 as the more likely scenario,” noting that Euro area first-quarter GDP data – which showed the economy grew more strongly than expected (+0.3% q-o-q) in the first three months of the year – were a welcome surprise.
The Day Ahead
The key economic data release today is the April employment report in the US. Following a 300k+ gain in payrolls in March the consensus expects the economy to have added a solid 240k jobs in April, with the unemployment rate seen holding at 3.8% and the year-on-year growth in hourly earnings forecast to ease to for a third consecutive month to 4%.
Other data due today include the ISM index of services activity for April in the US – its manufacturing counterpart came in weaker than expected according to the latest release published earlier this week – and a final PMI services reading for April in the UK.
Today's Talking Points 03.05.24
Market Commentary
The dollar is little changed against the euro and sterling from where it was this time yesterday morning, having attempted to retrace its post-Fed meeting dip in the intervening period, trading at around $1.0730 and $1.2540 ahead of the key US employment (payrolls) report later today. The euro-sterling cross remains tightly rangebound trading at about 85.5p.
Yesterday’s Events
In government bond market, US 2- and 10-year yields both rose by around 6bps as rate cut expectations US bond yields have fallen further as rate cut expectations firm a bit more following the Fed meeting – the market is now fully pricing in a quarter-point reduction in November – with both 2- and 10-year yields 5-6bps lower at the close, while equivalent German and UK yields have also been tracking lower. Meanwhile, US equities had a solid session, gaining almost 1%, with better than expected results from Apple after the close likely to add to the positive sentiment today.
ECB’s Stournaras – one of the most dovish members – says “we now consider three (interest) rate cuts in 2024 as the more likely scenario,” noting that Euro area first-quarter GDP data – which showed the economy grew more strongly than expected (+0.3% q-o-q) in the first three months of the year – were a welcome surprise.
The Day Ahead
The key economic data release today is the April employment report in the US. Following a 300k+ gain in payrolls in March the consensus expects the economy to have added a solid 240k jobs in April, with the unemployment rate seen holding at 3.8% and the year-on-year growth in hourly earnings forecast to ease to for a third consecutive month to 4%.
Other data due today include the ISM index of services activity for April in the US – its manufacturing counterpart came in weaker than expected according to the latest release published earlier this week – and a final PMI services reading for April in the UK.
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