Bets on a June rate cut by the Fed retreated on Friday after a hot jobs report that showed 303,000 jobs were added in March, beating the expected 214,000 additions. 10-year treasury yields soared to 4.4%, the highest since November 2023. USD gained initially, and despite Fed Logan's comments stating that it's much too soon to think about cutting rates, these gains faded going into the European close.
*Daily move - against G10 rates at 7:30am, 08.04.24
** Indicative rates - interbank rates at 7:30am, 08.04.24
Prime focus this week will fall on the CPI and PPI numbers from the US on Wednesday and Thursday, to give us a picture of the inflation story in the US. On Thursday we have the ECB monetary policy meeting, where no rate cut is currently expected, but perhaps more guidance and firmness on indicating a cut in June. And from the UK this week we have February's GDP numbers indicating a slowdown of growth from 0.2% in January to 0.1%.
Markets this morning are breathing a sigh of relief on signs of progress in the Middle East. Israel has pulled some troops from Gaza, and reports suggest that Iran has informed the US that they will refrain from retaliating to recent attacks by Israel should a ceasefire in Gaza be reached. The higher risk appetite could see a higher GBPUSD and EURUSD ahead of the US inflation numbers on Wednesday.
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