5 June: Weak NFP undermines the US$, Fed outlook, but underpins stocks. RBA, ECB coming up this week: FXCharts

The US$ fell sharply, while the S+P and the Dow both made yet new all-time highs after the disappointing employment data on Friday which indicated that the non-farm payroll report grew by only 138k in May, well below expectation of 185k, on top of which, the prior month’s figure was revised down from 211k to 174k. The unemployment rate though, dropped to 4.3%, the lowest reading since 2001 while the average hourly earnings grew 0.2% mm, meeting expectations. The soft NFP figure has done little to alter the fact that traders still see a roughly 88% chance of a Fed rate increase on June 14, down from 89% before the jobs report. Elsewhere, Gold and Silver took advantage of the dollar’s weakness while WTI was choppy, in heading lower before a bounce, to finish close to its opening level.

The coming week will be action packed, with the highlights being the UK General Election and Interest Rate Decisions from the RBA (Tue) and the ECB (Thur). There will plenty else besides, including the global Services/Composite PMIs, (starting with the Caixin China number) (Mon), EU Retail Sales (Tue), Australian GDP, China FX Reserves & EU GDP (Wed), China Trade Balance (Thur) and the UK Consumer Inflation Expectation(Fri).  Sterling will also probably be affected to an extent by the weekend terrorist action, which throws increased uncertainty into the election campaign. The downside may be quite vulnerable in the next couple of days leading into Thursdays’ vote. It is going to be busy through the week. Have a good one.