Payrolls in the US today

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 range-bound trading at about 85.5p.

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 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.