Traders are focusing on employment data and future monetary policy.
Current data indicates the stability of Fed interest rates at 3.50-3.75% until the next FOMC meeting scheduled for June 17. However, traders are beginning to factor in the possibility of a rate hike as early as January, shifting earlier forecasts from March. This is a result of the analysis of the latest labor market data. Futures on interest rates in the USA show a 96.2% probability of maintaining rates at the current level in June, but the chances of a hike in December have risen to 63% from 48% before the employment data was published. It is clear that market participants are reacting to the latest economic data, which may influence future Fed decisions.
In the USA, the unemployment rate remained in line with forecasts at 4.3%. Average earnings increased by 3.4% year-on-year, which is in line with expectations, although slightly lower than the previous 3.6%. In Canada, however, the unemployment rate was 6.6%, which is a better result than the forecasted 6.9%. Moreover, the change in employment in Canada significantly exceeded expectations, reaching 87.8 thousand new jobs compared to the forecasted 10 thousand. Such data indicates some resilience in the labor market, which may influence further decisions by central banks regarding monetary policy.
Revised data on annual GDP growth in the eurozone was disappointing, with a result of 0.3% compared to the forecasted 0.8%. This is a significant reduction compared to previous data, which may suggest an economic slowdown in the region. Weaker economic growth data may influence expectations regarding the monetary policy of the European Central Bank, which may be forced to consider additional stimulus measures to support the economy.
Tomorrow will bring new data and signals from the markets that may influence expectations regarding future decisions of the Fed and other central banks. Investors should pay particular attention to any new information regarding inflation and the economic situation in key regions that may shape future monetary policy.
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