May 02, 2025

“The non-farm payrolls report this afternoon is the highlight of the week. Only a few are calling for weaker numbers so soon, but there seems to be an expectation that they will worsen in the coming months.”

Sam Cornford – Head of Trading

USD

Today’s jobs report might be the most consequential piece of data this week. Remember that a labour market slowdown was the main trigger for last September’s 50bp Fed rate cut – if anything is going to generate a meaningful chance for a cut next Wednesday, it would be a poor jobs report. Policymakers can look through a distorted negative GDP print, but a sign of any serious weakness in jobs would start worrying the market. There is a general feeling, however, that the April report might be the last solid print before the tariff chaos starts sinking in. The median estimate is for a relatively soft 135K, and the unemployment rate is expected steady at 4.2%. The first warning signs might come through in the transportation sector, as that will be the first hit by weaker shipping volume.

GBP

The data in Europe and the US will be the main driver for sterling today, as investors look ahead to next week’s Bank of England decision. Yesterday’s mortgage approvals data was broadly as expected at 64K, and there was some relief as the April manufacturing PMI was revised up from 44.0 to 45.4. The next major catalyst for the UK is the Bank of England on Thursday. Another once-per-quarter cut is more than fully priced because of the trade anxiety and four full cuts are priced before the end of the year.

EUR

The euro hit levels more than 2.5% lower than their April peak yesterday as the dollar continued to recover ground. Today’s April CPI report is set to be a mixed picture. The headline figure is expected to drop from 2.2% to 2.1%, and the consensus on the core measure is a slightly higher 2.5%. A Reuters story last week suggested that there is already a strong consensus around a June rate cut at the ECB, so there would probably need to be a big upside surprise for that to shift.

Markets

The US markets have been buoyed in recent days by some earnings beats form the likes of Meta and Microsoft. The tech-focused Nasdaq has naturally been a beneficiary of the improved tech outlook.

Main Economic Events (All Times CET)

11:00am: Eurozone CPI
2:30pm: US Non-Farm Payrolls

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