Good morning,

Healthcare reform still looking sickly

Heading into today’s US jobs report, markets are suspiciously quiet. A typical Friday that sees the latest employment figures released is a quiet morning, a panicky lunchtime and an unobtrusive afternoon. Forces from the political world in the US, UK and France may upset that however.

The news that Donald Trump has managed to get a bill through the US House of Representatives has not cheered the US dollar as it seems that Republicans in the Senate are going to write their own repeal of Obamacare. A change in the law in the States around healthcare is indeed closer but little of that confirmation has been transposed on to predictions around Trump’s ability to get anything done in regards to issues like taxes.

In the UK, local elections have seen a swing of councillors and newly created Mayoral seats into the hands of the Conservative party. Turnout seems to have been almost laughably low – reports of near single digit percentage turnout in some seats – and so the challenge remains to Opposition parties to get the vote out on June 8th.

Macron loss would be an enormous surprise 

In France we are less than 48hrs away from polls opening and the decision between centrist Macron and nationalist Le Pen being set. The polls have shown little movement in the fortnight since the first round and we are not changing our thoughts that Macron will have too much for Le Pen come Sunday night.

This result is largely priced in to the euro; we estimate to about an 88% percent probability. This means that confirmation of a Macron win will generate a small amount of EUR buying on Sunday night. We think it could be as little as 1-1.5%. The meatier move is what should occur should the polls be proved wrong and Le Pen takes the glory. This could easily drive the single currency lower by 5-7% in the 24hrs after the results with most of the move coming in the ultra-thin markets of early Asian trade.

Once again we should get an idea of how the vote has gone by about 7pm BST on Sunday night.

Jobs, jobs, jobs

Today is all about the USD and the absence of a dovish lilt to the Federal Reserve meeting on Wednesday and no fewer than 6 speeches from Federal Reserve rate setting committee members means that markets are geared towards the jobs report in a very enthusiastic fashion. Economists and analysts are looking for 190,000 jobs to be added in April which we think looks a little high given other employment dynamics in the US economy.

A poor number could easily put EURUSD through the roof of 1.10 for the first time since the US election in November and GBPUSD through the 1.30 barrier.

The release is due at 13.30 BST

Have a great day and a better weekend

Click here for live rates