Pillole giornaliere

The U.S. dollar held a narrow lead against its peers, with its coming fate hanging on what today’s important monthly checkup of the world’s biggest economy reveals. The dollar was on course for a down week as mixed U.S. data has suggested a flimsy case for the Federal Reserve to boost interest rates this year. Even the IMF weighed in on the U.S. rate debate, saying this week that the Fed should wait until next year since the economy went into reverse in the first quarter. Today’s U.S. employment report, forecast to show solid hiring of around 225,000 for a second month in a row, should help to momentarily settle the score as to whether the Fed would boost rates in 2015 or 2016. The sooner the Fed is seen raising interest rates, the stronger the dollar should fare since higher borrowing rates would burnish its appeal. Markets today will also wrestle with the Greek debt situation with a resolution still proving elusive, keeping elevated the risk of default and potential boot from the 19-nation bloc. Greece said it would miss today’s deadline to repay the IMF the hundreds of millions of euro it owes and instead planned to cut a lump sum payment at month-end. America’s employment report is due at 8:30 a.m. ET.

EUR

The euro was steady ahead of America’s jobs report and on pace for a solid multi-cent gain on the week amid signs of improving momentum in the bloc’s economy. Inflation is back in the black and unemployment, albeit still high above 11%, ticked lower. The region’s improving economy has sparked a ferocious spike in government bond yields which has made the single currency a more enticing bet. The euro isn’t out of the woods, though, and could descend anew should today’s U.S. employment report suggest the first quarter downturn would be temporary or if the situation with Greece should remain at an impasse and heighten the risk of default and Greece’s exit from the currency union.

USD

The market camp betting on a 2015 U.S. rate hike got a big backer: the world’s biggest economy. The dollar soared after U.S. job growth easily topped forecasts (+225,000) with a gain of 280,000 in May. The workforce grew which caused unemployment to increase a tick to 5.5%, a still decent level. Perhaps the best news though came from wage growth which also beat expectations with a 0.3% gain. Today’s robust jobs report appeared at odds with the IMF who this week called on the Fed to hold fire on a rate hike until next year. Fed officials in favor of raising interest rates sooner rather than later will find compelling ammunition in today’s jobs report. The Fed announces its next policy decision in less than two weeks on June 17.

CAD

The loonie strengthened to new session highs after Canadian hiring last month proved the strongest all year. Hiring was nearly 6 times better than forecasts of +10,000 with an outsized gain of 58,900. Unemployment held at 6.8%. Canada’s burst of hiring speaks better about the economy’s prospects and seemingly closes the door a little to the chance of further rate cuts north of the border.

GBP

Signs of stiffening headwinds on Britain’s economy had the pound on pace of a week of general underperformance. The big blow to sterling sentiment came from news this week that Britain’s services, a vital growth engine, experienced its largest monthly decline, a 3-point drop to 56.5 in May, in more than three years. Coupled with the weakest inflation since the 1960s the wait for a U.K. interest rate hike has seemingly grown a bit longer, weighing on the pound.