JOLT job openings showed some resilience in the job market, with the number of openings only falling to 8,756,000 instead of falling to 8,730,000. However no gains on USD as Fed speakers tempered some recent hawkish interest rate pricing, with Daly and Mester suggesting three rate cuts this year was still a “reasonable baseline”.
*Daily move - against G10 rates at 7:30am, 03.04.24
** Indicative rates - interbank rates at 7:30am, 03.04.24
Friday's payroll numbers are still the prime focus for markets this week, particularly for those positioned for further gains on USD. Today we have the ADP payroll print and ISM services index, and anything to add to the recent narrative of the US economy being resilient should see some minor USD gains limited to its strongest level for this year. Before then we have March’s inflation report from the EU, and we look to see if a drop in prices shifts rate cut expectations by the ECB to happen in April - if so, then expect EUR to weaken.
With markets reducing the odds of a Fed June rate now down to 50%, we saw the USD index find resistance at the 2024 highs. The question now is what will be needed to see another leg higher for USD? Current pricing in the money markets suggests three rate cuts are still on the cards this year, and it will likely need markets reducing the total number of rate cuts expected this year to see another leg higher for USD.
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