• Expectations for an interest rate hike by the Fed, primarily in July, have been growing, with the pricing reaching 25 basis points, driven by strong data from the US labor market.
• The NFP report showed a job growth of 339k, surpassing the expected 190k. However, the household survey-based unemployment report revealed an increase in the unemployment rate from 3.4% to 3.7%, which suggests the potential for keeping interest rates unchanged in June.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile app• Wages are growing at a rate of 4.3% year-on-year, indicating a slight decline in wage pressure. The Thursday ISM report for the manufacturing industry showed a significant decrease in prices paid, suggesting a potential sharp decline in inflation for May.
• In response to the strong US data, we witnessed an increase in bond yields, a strengthening of the dollar, and a decline in gold prices. EURUSD is trading near 1.0700, although it previously tested levels around 1.0800.
• Gold dropped from around $1970 to $1950 per ounce.
• Bond yields rose sharply after Fitch indicated its negative outlook for US debt. Earlier, the Senate passed a bill to suspend the debt limit until 2025.
• Crude oil rebounded by 2% today, continuing its recovery, possibly related to expectations regarding the OPEC+ decision on production limits. However, it is expected that OPEC+ will not reduce the limit, although surprises similar to April cannot be ruled out.
• Additionally, oil is supported by news from China about a likely introduction of another stimulus package for the real estate market. Following this news, we saw a strong rebound in copper prices, but it was later neutralized due to the strengthening of the dollar.
• Despite the possibility of interest rate hikes, Wall Street continues its recovery. US100 is up 0.7%, US500 up 1.5%, and US30 up 2.0%.
EURUSD, H1 interval, source xStation 5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
