• Ongoing push-pull dynamic in USD flows continues, reflecting a balanced market sentiment.

Stronger-than-expected US job data helped ease concerns around the labour market that had been building earlier in the week. The US economy added 139,000 jobs in May, beating the forecast of 126,000, while wage growth also surprised on the upside.

This better economic data prompted a rise in Treasury yields, which in turn supported a stronger US dollar. Meanwhile, US equity markets closed the day in positive territory, buoyed by renewed confidence in the economic outlook.

Highlight:

• Solid jobs report and wage growth boosted confidence in the US economy, leading to gains in both yields and equities, while strengthening the dollar.

This week is relatively light on data, but a few key releases will be closely watched:

• US CPI (Wednesday): Core inflation is forecast to rise 0.3% in May (vs 0.2% in April), which may reinforce expectations that the Fed will keep rates on hold.
• UK Wage Data (Tuesday): A 5.5% year-on-year rise in wages is expected, likely strengthening the case for the Bank of England to pause rate changes in June.
• China Inflation: Also on the radar, with potential implications for global growth sentiment.

In the UK, attention will also turn to Wednesday’s government spending review, detailing how £600bn in public funds will be allocated.

Meanwhile, the US dollar is easing slightly, retracing some of Friday’s gains as markets eye trade talks between the US and China in London. China’s recent approval of rare earth exports appears aimed at reducing trade friction.

Focus:

• Focus this week is on inflation and wage data from the US, UK, and China—all of which could shape central bank rate decisions and broader market direction. Trade diplomacy is also in play, adding another layer of uncertainty to dollar moves.

This document has been prepared solely for information and is not intended as an Inducement concerning the purchase or sale of any financial instrument. By its nature market analysis represents the personal view of the author and no warranty can be, or is, offered as to the accuracy of any such analysis, or that predictions provided in any such analysis will prove to be correct. Should you rely on any analysis, information, or report provided as part of the Service it does so entirely at its own risk, and Frank eXchange Limited accepts no responsibility or liability for any loss or damage you may suffer as a result.  Information and opinions have been obtained from sources believed to be reliable, but no representation is made as to their accuracy. No copy of this document can be taken without prior written permission.