As many European dealers and traders return to their desk they’ll be faced with what should go down in economic books as a historic week. The focus will undeniably be on what is expected to be nothing short of a horrific US employment report. The report will arrive on Friday afternoon when the UK will be observing the May Bank Holiday.
Economists are forecasting job losses of 21,000,000 for the month, this follows after a drop of 701,000 in March which ended a run of 113 months of consecutive employment growth. Alongside the shocking headline number, the unemployment rate is set to tick up to 16%.
The US dollar has likely begun to price in the potential outcomes for Friday’s report. After a bout of weakness last week, which took cable (GBPUSD) above the $1.26 handle and EURUSD >$1.10, the buck has regained its composure and begins Monday stronger against the pound and euro.
This week will also see a Bank of England monetary policy announcement. This arrives at 7 am on Thursday. No major changes are expected with the headline interest rate remaining steady at 0.10%. As usual, many investors will keep a close eye on the Bank’s communication and its insights for both the future of the economy and policy.
Written by Viv Savani. 8:44am, May 4th 2020
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