Last Friday, the last US labour market report surprised on the upside as the economy created 211k private job in April, beating forecast of 190k. Previous month’s reading was revised slightly to the downside (79k versus 98k first estimate). Similarly, the unemployment rate slid to 4.4% from 4.5%, while the participation rate ticked down to 62.9%. Investors did not get carried away as weak wage pressure remains a significant hurdle for an acceleration of the US economy. Average hourly earnings grew 2.5% year-over-year in April, down from 2.6% in March.
Now that the French election is over, the market will switch focus towards the US. Indeed, the next couple of months will be key for world’s largest economy and global markets. Trump’s reform plan and a potential tightening move from the Fed at its June meeting will be the main driver for now.
Despite Macron’s victory, the greenback started the week on a solid footing, rising roughly 0.40% against the euro, 0.50% against the NOK and 0.30% against the Swiss franc. Asian EM held ground, while European ones moved in negative territory. We expect the dollar to start picking up pretty soon.
By Arnaud Masset