Weekly Comment – After dovish Fed, NFP unlikely to boost sagging dollar
- Raffi Boyadjian
The US dollar recouped some losses at the end of the week but couldn’t hide the bruises endured in April as the Fed dashed any remaining expectation that it will respond to any spike in inflation. The focus next week will be on the NFP numbers. But don’t expect the dollar to get excited.
Next week’s highlights:
- The RBA meets on Tuesday and will update its view on the economy. Australia’s recovery remains strong but subdued inflation and regional virus surges could keep policymakers cautious, making it difficult for the aussie to gain much traction versus the flagging greenback.
- The Bank of England could turn out to be the surprise of the week. No policy change is expected on Thursday but some are speculating the Bank will begin tapering its QE programme. It’s probably too soon for that and a bigger worry for the pound is the Scottish Parliament election on the same day.
- The US jobs report for April is expected to be another stellar one but don’t hold your breath for any fireworks as the Fed thinks the recovery has a long way to go. However, the loonie and kiwi might be more sensitive to domestic employment
- The S&P 500 hit fresh all-time highs on the back of outstanding earnings results from the big tech companies. But overall, the mood in equity markets has been muted as much of the good news seems priced in already.
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