Fundamental Comment

US Non-farm Payrolls, BOE In Focus

US Non-farm Payrolls, BOE In Focus

Financial markets' participants will be following important economic reports this week, the foremost of which is the jobs report from the United States, as well as the interest rate decision by Bank of England.

It is necessary to note that the PMI services indicator published by the Chinese economy is expected to be of great importance, as it will reflect the impact of the spread of the Covid-19 on the world’s second-biggest economy.

US Dollar

Certainly, the jobs report is expected to be the most important and influencing on the movements of the dollar, as it is considered a leading indicator used by the Federal Reserve to assess the performance of the labor market, where it will also determine the impact of the virus on US economy.

The non-farm payrolls may indicate that American employers cut 200,000 jobs in April, and the unemployment rate jumped up to 14 percent from 4.4 percent in March, according to median forecasts.

The final Composite purchasing managers’ index for the month of April will also be of interest to investors, as it may give an indication about the pace of growth in the US economy with the start of second quarter.

The Composite PMI may point to a widening contraction to 27.4 in April, compared to March's reading of 40.9.

It should be noted that any comments from Fed members or President Donald Trump must be carefully watched, as well as the latest updates about the outbreak of the Coronavirus in the United States.

Pound Sterling

This week, the monetary policy meeting of the BOE will probably be of paramount importance, as it will give an update on the economic situation in Britain after the monetary actions announced by the central bank over the recent period to help the British economy face the negative repercussions of the spread of the Coronavirus.

While the BOE is predicted to hold interest rates and monetary policy this week, eyes will focus on the BOE inflation report that will provide a complete economic outlook on Britain, including the latest growth and inflation estimates.

Euro

The euro will likely be affected by the important data that will be released from the euro zone, as investors will focus on the manufacturing and services PMI.

The final composite PMI in the euro area may indicate a contraction in April at 13.5 from the reading of 29.7 recorded in March.

Investors will also focus on the European Commission’s economic forecasts for EU member states, as it provides an outlook for the 19-nation region over the next two years.

Commodities

Gold closed on a weekly loss last week after it failed to take advantage of the decline in the US dollar, amid some profit-taking by investors and optimism that shifted investors’ direction towards risky assets.

This week, the yellow metal will largely depend on the important economic data issued by major economies, in addition to optimism or pessimism among investors regarding reopening economies and finding a treatment to the Covid-19 pandemic.

With regard to crude oil, prices recovered last week, as the OPEC+ production cut pact of about 9.7 million barrels per day took effect at the end of the week, and as optimism about reopening economies soon raised forecasts crude demand would increase gradually in the coming period.

Oil prices this week will depend the general sentiment in the market, in addition to the weekly US government report tracking the change in crude stockpiles.

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