US non-farm payrolls

The data will be one to validate or invalidate the prevailing market sentiment, and that is currently one where traders are walking back on dovish Fed expectations since the banking crisis. As you can see from the pricing in the Fed funds futures curve below, what a difference two weeks makes in terms of the outlook.


On 11 May, traders were still expecting three rate cuts by year-end. Fast forward to today, and the implied rate is still sitting above 5% for December pricing. The higher for longer narrative has certainly won out and as warned before, that is one that the dollar could have - and currently is - benefit from.

A tighter jobs market will help to reaffirm the Fed's hawkish stance with stronger wages data also to act as a supportive factor, in the event we do see those data points come in above estimates.

But either way, labour market conditions are holding up and as the economy continues to move along nicely, that will keep the Fed's conviction rather steadfast at least for now.