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- Oil prices remain persistently elevated amid prolonged US-Iran stalemate
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- What are the main events for today?
- Iran reaffirms that latest proposal to US includes lifting naval blockade and sanctions
- UK labour market eases with dark clouds from Middle East conflict hanging over
- FX option expiries for 19 May 10am New York cut
- Caution still up in the air as the US-Iran conflict drags on
- NVDA Stock Prediction before Earnings on Wed, 20 May
It's been a rather uneventful session with only the UK jobs report on the agenda. The data was mixed, but overall softer than expected as the unemployment rate ticked higher and the early estimate for April showing a 100K drop in payrolls. The ONS did put out a caveat though in saying that: "the April 2026 estimate should be treated as a provisional estimate and is likely to be revised when more data are received next month. The early April estimate is more uncertain because of the change of tax year."
In the markets, there's still some caution in the air even if Trump called off a large-scale military strike against Iran. For context, he said that the suspension was at the request of Gulf leaders, to allow for peace talks to continue. He added that there is a "good chance" of a deal now that the strike has been called off.
The US dollar recouped yesterday's losses as the greenback remains supported amid the US-Iran stalemate, the persistently elevated oil prices, the resilient US data and the potential for Fed rate hikes. These forces are now weighing on the markets more broadly after Treasury yields broke above March highs on Friday. We might have reached a pain point where the only solution is to quickly reopen the Strait of Hormuz.
In the American session, we get the Canadian CPI report. Headline CPI is expected to increase to 3.1% vs 2.4% prior, while the more important Trimmed-Mean CPI Y/Y is seen remaining unchanged at 2.2%.
We recently got the Canadian employment report and the data showed once again a soft labour market. Governor Macklem stressed that while the Bank would be “looking through the war’s immediate impact on inflation”, if it spills into the broader economy, “there may be a need for consecutive increases in the policy rate”. The central bank will likely be watching the Trimmed-Mean CPI for signs of spillovers.
Lastly, we have Fed's Waller speaking. I think it's worth highlighting it today because we are approaching the June FOMC meeting and it will contain the SEP and the dot plot. These meetings are generally more important for policy signals.
Fed's Waller has been a great "leading indicator" for Fed policy in this cycle and I think the market would react in a big way if he were to change his stance now. He's been worrying about the labour market but the data has been pointing to resilient conditions. What is more in tension now is inflation and if he switches his focus back to that, it might be taken as a signal of potential rate hikes.
