Macro Roundup (May 10)

SHANGHAI, May 10 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar fell to its lowest in more than two months on Friday after US jobs data for April came in well below expectations, putting a damper on hopes that a roaring economic recovery would lead to higher rates any time soon.

Nonfarm payrolls increased by only 266,000 jobs last month after rising by 770,000 in March, the Labor Department said in its closely watched employment report on Friday. Economists polled by Reuters had forecast payrolls advancing by 978,000 jobs.

The dollar was down 0.34% at 90.561 against a basket of major currencies, having dropped as low as 90.338, its lowest since Feb. 26, following the data.

“The dollar is really getting spanked this morning,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management.

“The number was so out of consensus, that I think the market expectation of super-high rates and a squeeze on inflation is going to go down by the wayside, and that obviously means more liquidity from the Fed,” he said.

On Wall Street, futures contracts held steady at the start of the overnight session Sunday evening, suggesting that the major U.S. equity indexes could trade at or near records when regular trading opens in New York.

Dow futures gained 30 points, while those linked to the S&P 500 rose 0.1%. Nasdaq 100 futures added 0.2%.

The moves in extended trading came after last week’s trading ended on an upbeat note with both the Dow Jones Industrial Average and the S&P 500 hitting fresh all-time highs on Friday.

Last week, the Dow rallied 2.7% and the S&P 500 gained 1.2%. Despite a 0.9% rally on the week’s final session, the Nasdaq Composite shed 1.5% over the same period.

The late-week optimism came despite a far-weaker-than-expected April jobs report, which showed that U.S. employers added 266,000 net payrolls last month. Economists polled by Dow Jones had expected 1 million additions.

Oil prices steadied on Friday and were set for a weekly gain against the backdrop of optimism over a global economic recovery, though the COVID-19 crisis in India capped prices.

Brent crude futures settled 0.28% higher at $68.28 per barrel and U.S. West Texas Intermediate (WTI) crude advanced 0.29% to $64.90 per barrel.

Both Brent and WTI are on track for second consecutive weekly gains as easing restrictions on movement in the United States and Europe, recovering factory operations and coronavirus vaccinations pave the way for a revival in fuel demand.

In China, data showed export growth accelerated unexpectedly in April while a private survey pointed to strong expansion in service sector activity.

Gold extended its rally, jumping more than 1% to its best week since November last year after an unexpected drop in U.S. jobs growth in April hastened a retreat in the dollar and US Treasury yields.

US nonfarm payrolls rose by only 266,000 jobs last month, falling short of expectations, with employers likely frustrated by labor shortages as the economy reopens.

Spot gold jumped 1.2% to $1,837.54 per ounce by 9:58 a.m. EDT (1358 GMT), after jumping as much as 1.5% to its highest since Feb. 11, at $1,842.91. Up 3.8% so far, gold is on course for its best week since early November 2020.

US gold futures rose 1.3% to $1,838.80.

With the “complete miss on the (jobs) number,” the yields are going to compress for the moment and the dollar index also broke below support levels, allowing gold to shoot up, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

Eurozone Sentix Investor Confidence Index for May will be released today.