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Poor Non-Farm Payroll means June US rate hike now as likely as Leicester winning the…

Poor Non-Farm Payroll means June US rate hike now as likely as Leicester winning the…

The headline US non-farm payrolls data came in below expectations on Friday, posting a gain of 160k for April which missed the 200k the economists had expected. The unemployment rate held at 5.0% and the participation rate edged slightly lower. The headline increase in average hourly earnings came in at 0.3%, falling in line with expectations.

Due to Friday’s weak employment report, investment banks and traders have started to revise their forecasts for a rate increase in June. Initially, the result was a sharp weakening of the Dollar as Cable briefly hit 1.4546 and EURUSD reached 1.1470. Cable could not hold those levels, as Pound selling pushed the pair below the day’s open and extended the Dollar’s gains against Sterling to a fourth successive day.

GBPUSD opened this morning at 1.4414. EURUSD finished Friday largely unchanged with strong Euro selling at the 1.1470 level pushing the pair back down to finish the day at 1.1404, fractionally below the day’s open.

Sterling was subjected to choppy trading on Friday after a lack of Tier 1 UK data left it prone to international influences. There were fresh concerns surrounding the EU referendum vote, due in just over six weeks, which tended to have a negative impact. Concerns surrounding the economic outlook remained important following the weak PMI data that was released last week. A decline in bond yields prompted speculation that the Bank of England could discuss a cut in interest rates at Thursday’s policy meeting along with the latest inflation report.

The Euro strengthened against the Pound at the end of last week as we saw GBPEUR fall by half a percent as the EU referendum vote nears. This morning the Finance Ministers of each European member nation will meet with President Mario Draghi to discuss the European economy in the Eurogroup meeting. This will be followed by the Sentix Investor Confidence survey for May. Besides the plethora of referendum-related news, attention this week will turn to the European gross domestic product (GDP) figures that are due this Friday. This data is the most important indicator of the European economy’s health.

Data to watch: Eurogroup meeting. 9.30am Euro May Sentix Investor Confidence. US April Labour Market Conditions Index.

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