The massive surprise in US job growth lent a strong hand to the downtrodden dollar ahead of US CPI for May and the FOMC meeting in the week to come.
Non-farm payroll data jolted markets on Friday after the number of jobs added in May surpassed even the most optimistic of estimates. In addition, average earnings for May also rose above the highest estimate compared to May last year to extend the dollar's bullish advance.
The fact that the unemployment rate rose to 4% appeared to fade into the background as it was not notable enough to detract from the jobs and wage data. Next week, more top tier US data is due with a bumper very busy Wednesday consisting of US CPI and the FOMC rate decision later in the evening. The surprising jobs data is unlikely to derail the current Fed thinking but has had an effect on market pricing where there is just the one rate cut fully priced in this year with a chance of a second. Other macroeconomic data in the US has eased, meaning the jobs data will need to be followed closely if any trend is emerging but for now, it is just one print.
Sterling is also in focus next week and it appears to have quietly appreciated in the background. UK jobs data is followed by GDP data for April. The UK labour market has softened more visibly than in the US but growth is showing positive signs if recent surveyed data is to be taken at face value. The Bank of Japan rounds up the week after officials pointed towards a more relaxed approach to aggressive bond purchases - an outcome that could see Japanese 10-year yields trade freely above the 1% mark which is likely to provide a lift for the yen.
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