Weekly Market Update 7 May – Markets shrug off poor labour numbers, BOE left rates unchanged
Weekly Market Update 7 May – Markets shrug off poor labour numbers, BOE left rates unchanged
1. Economists and investors alike were surprised at the abysmal non-farm payrolls report, with USD trading sharply lower against all major currencies. Both the job growth numbers (266k actual vs an expected million) and the unemployment rate (6.1% actual vs an expected fall to 5.8%) took everyone by surprise given the strong consumer confidence. However, the market expects recovery in the US economy is to remain strong, as shown in the growth in the equity market.
2. Bank of England left interest rates and QE target unchanged, while slowing the weekly pace of asset purchases. They also expressed confidence in the recovery of the economy and signalled that it is on course to end emergency support later in the year. Estimates for UK GDP growth was raised as easing restrictions on economic activity and faster than expected rollout of COVID-19 vaccinations aided in the quicker recovery.
3. CAD rose to its highest level before falling, as economists have been underestimating Canada’s job growth and the expectation was that it would be no different in April prior to the report. The actual numbers were terrible, with higher job losses and unemployment rate being worse than expected though CAD found support due to the underlying strength in the labor market and the expectations of a stronger recovery.
