On the last day of the previous week the stock indices demonstrated growth in a single dynamics and closed in the green zone. Dow Jones industrial average added 0.29% (21206.29), S&P 500 rose by 0.37% (2439.07), the Nasdaq jumped by 0.94% (6305.80). European markets also went up. The German DAX rose by 1.25% (12822.94). Britain's FTSE 100 added 0.05% (7547.63).
Today it is expected a few publications of the macroeconomic data and the speeches of the monetary authorities that could affect investors' decisions during the trading sessions.
At 11:00 MSK PMI for the Eurozone from Markit for May
At 11:00 MSK the Index of business activity in the services sector Eurozone for May
At 11:30 MSK the Index of business activity in the services sector of GB for May
At 15:30 MSK the Level of productivity in the non-agricultural sector of America for the first quarter
At 15:30 MSK the labor Costs of America for the first quarter
At 16:45 MSK PMI of US from Markit America in May
At 16:45 MSK the Index of business activity (PMI) in the services sector America in May
At 17:00 MSK factory orders America in April
At 17:00 MSK the Index of employment in the non-manufacturing sector of America from the ISM for May
At 17:00 Moscow time the Index of business activity in the non-manufacturing sector (PMI) of America from the ISM for May
Some stock markets will be closed today due to national holidays. Switzerland and Germany celebrate the feast of the Spirits, there is the Queen's birthday in New Zealand.
The long-awaited data from the labor market was surprisingly negative for investors. In May, the growth of the number of jobs in non-agricultural as analysts have predicted could reach 185 thousand, but in fact the figure was significantly lower then the forecast and was just 138 thousand. Also, it was revised the results for last month for the worse of 66 thousand. The unemployment rate fell slightly, but was better than expectations at level of 4.3 %. Also according to official data, the budget deficit has increased and amounted up to $47.6 billion while it was waiting 46.1 billion.
All this circumstances has led to a sharp weakening of the U.S. currency. At the moment, the EUR/USD jumped more than 80 points and reached the level of 1.1280. The day before after publication of positive data from ADP, the dollar strengthened, but the official information has led to the opposite effect. Major stock indexes have continued the growth which was begun the day before. The index of wide market S&P 500 reached the level of 2440 during the day, which is quite close to the target 2450. The beginning of the week in the Asian session, futures on the S&P 500 opened with a gap down, but tries to recover losses.
Despite the fact that the statistics speaks about the decline of employment growth, the labour market in General feels good and meets the expectations of the Federal reserve. Therefore, the probability of raising rates at its June meeting remains.
For the pound the week started in the red zone. GBP/USD opened with a gap down in the Asian session. The reason of that is the reaction of investors to the cruel terrorist attacks in Central London at the weekend. Market participants are also wary of the upcoming parliamentary elections and past events may interfere to Teresa Mei to gain a parliamentary majority, which in result may lead to more severe scenario of exit from the EU. Brexit negotiations will start on June 19.
Gold futures rallied more than $ 12 per ounce on the background of data from the labor market. Investment attractiveness of the yellow metal increased by political tensions and the weakness of the dollar.
Reducing the cost of the American currency has played into the hands of buyers of futures contracts for oil. On Friday it was possible to observe hints on recovery, but the day was still closed in the red zone. Quotes is under the pressure of news about increased production in Libya and Iran, and America's withdrawal from international climate agreements, which could lead to increase in supply from shale oil producers. In the Asian session, oil is opened and is trading with small growth.
Sincerely, Global FX chief analyst Sergey Melnikov.