US jobs again in the limelight

Economics

This week we expect the US labour market report for May to continue to post strong employment growth while the unemployment rate probably fell back slightly.

The ISM business sentiment indices probably gave back some ground but stay around 20 year highs. In the Eurozone we expect the PMI manufacturing index to have moved sideways while the service indicator may have gained a little. The ECB is expected to keep interest rates on hold at 2%.

Foreign exchange

The euro outlook remains bullish towards 1.2400/1.2480. The euro should remain above 1.2125 now to keep the pressure on the upside and to avoid a deeper correction with 1.2060 resp 1.1940 as next support levels.

We are bearish regarding the dollar/yen with the 108.40/107.80 area as first and 106.00 as next candidate support levels. Resistance levels for this week are 111.25 resp 112.15.

Fixed Income

Yield curves were globally stable over the week both in Europe and the United States. We do not expect major shifts before the publication of the employment report but yields are expected to move higher by the end of the week. In Europe we also expect more upside later this week.

Equities

Oil prices came off their highs and markets managed to end the week on a positive note for the first time in over a month.

Still this rally on oversold needs a lot of additional confirmation. A new attack on foreigners working for Saudi-Arabia's oil industry will hamper markets at Tuesday's kick-off of the week.

Most of the attention of course will be once again going to Friday's key US employment figures for May.