Ipek Ozkardeskaya
Swissquote Bank Ltd
The selloff in British gilts and the pound slowed yesterday after Rachel Reeves compromised on her spending plans but the pound, as other major currencies, remain under a decent selling pressure into the US jobs data due later today.
Before the announcement of the US official jobs data, activity on Fed funds futures suggests that the Fed’s next rate cut should arrive in May – with around a 53% chance. A set of stronger-than-expected data could flip this expectation to the ‘no cut until June’ side very rapidly and enhance the selloff in the US dollar and support a further appreciation of the US dollar, while a set of softer-than-expected jobs data could strengthen the hope of a May cut. Given how quickly the Fed hawks have gained ground in recent weeks—and how much more investors are excited by dovish signals—the market’s reaction to soft data could outweigh its response to strong figures.
On the flip side of the world, the Chinese struggle with a completely different problem. Despite the announcement of multitude stimulus measures, yields there continue to dive, and the gap between the US and Chinese yields are widening *alarmingly*.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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