Weekly Market Update (10 May 2021) – A strong let-down from the U.S. NFP report

#OPINIONLEADER#

ByLCMS Traders FX Analysis Team

 MAY 10, 2021

(1) The U.S. nonfarm payroll report delivered disappointing job figures for April. A mere 266,000 jobs were added into the economy as opposed to the expectation of 990,000. Also, the number of jobs added in March was revised downwards from 916,000 to 770,000. Unemployment rate rose slightly as opposed to the expectation of a decline. As a result, the U.S. dollar weakened across the board.

(2) During its meeting last Tuesday, the Reserve Bank of Australia (RBA) held interest rate unchanged at 0.10% while keeping bond purchases unchanged as the central bank has just started the second round of its bond buying last month. However, the RBA will be considering future bond purchasing during their July meeting. The central bank has revised upwards its growth forecast to 4.75% and revised downwards its unemployment forecast to 5.0%. It also expects inflation to rise to 1.5% this year.

(3) Similar to the RBA, the Bank of England (BoE) held interest rate unchanged at 0.10% and kept bond purchase at the same amount. Besides, the BoE will be slowing down the pace of asset purchase from £4.4 billion per week to £3.4 billion per week as a result of the recent strong growth in the UK economy. The BoE also expect growth to recover to pre-COVID levels this year while inflation is expected to rise above 2% temporarily towards the end of 2021 due to rising energy prices. However, BoE Governor Andrew Bailey said that the slowdown in the pace of asset purchase does not imply a change in monetary policy stance. He also highlighted that the central bank has not concluded on reducing quantitative easing. This led to the weakening of GBP across the board.