In focus today and Friday
In the US, the May Challenger Report for layoff announcements is due. While AI-driven layoffs have increased so far in 2026, the overall number of cuts has remained modest in historical context.
In Sweden, May flash CPI will be published. Our forecast is that core inflation will be 0.22% y/y, CPIF 1.28% y/y and CPI 0.5% y/y. We do not yet expect any clear increase in underlying inflation as a result of the conflict in the Middle East. From 1 May, the tax on fuel was reduced by SEK 1, which is partly restraining the increase in energy prices.
In the US on Friday, the May Jobs Report is released in the afternoon. We forecast nonfarm payrolls at +110k, slightly above consensus, the unemployment rate at 4.2%, and average hourly earnings at 0.3% m/m. A solid report could tilt the Fed’s balance of risks further towards a tightening bias.
In the euro area on Friday, focus turns to the third estimate of Q1 GDP, which will also include the ECB’s preferred wage measure, compensation per employee. The first indicators for Q1 point to easing wage pressures, which is putting a downward pressure on services inflation amid the energy shock.
Economic and market news
What happened overnight
In Japan, Bank of Japan Governor Ueda signalled that “we must discuss the pros and cons of raising the policy rate if we judge that upside risks to prices outweigh downside risks to economic activity,” effectively cementing market bets on a June rate hike. This marks a shift toward more conventional inflation-targeting with scope for more frequent and possibly faster rate increases.
In the US-Iran war, Israel and Lebanon agreed to implement a US-brokered ceasefire, contingent on Hezbollah halting all attacks and withdrawing from southern Lebanon. The deal follows an earlier failed April ceasefire and continued heavy fighting and displacement in Lebanon, leaving the truce fragile.
What happened yesterday
In the US, ADP’s National Employment Report for May landed close to expectations at 122k (cons: 117k), but it was noteworthy how the jobs growth was very broad-based across sectors and firm sizes. Moreover, the ISM services index ticked higher to 54.5 (cons: 53.8, prior: 53.6), driven largely by accelerating growth in new orders. The prices subindex reached its highest level since August 2022, while higher oil prices add to the upside risks for inflation.
Against this backdrop, Fed member Lorie Logan noted she is increasingly concerned that higher interest rates could be necessary later this year, echoing recent similar language from other FOMC participants. We continue to expect Fed hikes in December and March and forecast EUR/USD trending lower towards 1.12 over the coming year.
In the euro area, the final May services PMI was revised significantly up to 47.7 from 46.4 in the flash estimate, lifting the composite PMI to 48.5 from 47.5. While still in contractionary territory and pointing to weak underlying activity, the outturn is less negative than suggested by the flash release. Yesterday we published an updated forecast for the euro area economy. We expect near-term stagnation with real GDP at 0.0% q/q in Q2 and 0.1% q/q in Q3 before a rebound from Q4 and have revised down our 2026 growth outlook to 0.7% y/y due to higher energy costs. Read more in Nordic Outlook – Ripple effects from the Strait, 3 June.
In Sweden, services PMI increased to 53.9 in May from 52.6, while the composite PMI rose to 54.9 from 53.9. New orders increased, and delivery times rose to 65.7. Longer delivery times contribute positively to the PMI as they normally tend to reflect strong demand. However, it is reasonable to assume that the current increase in delivery times is instead driven by supply chain disruptions. Prices increased to 80.1, which is historically very high and has been at a similar level only during 2021/2022.
In the oil market, US commercial crude stocks fell by 8 million barrels in the week ending 29 May to 433.7 million barrels (about 3% below the five‑year average), even though a further 8 million barrels were released from the Strategic Petroleum Reserve into the market. Taken together, this implies a roughly 16 million‑barrel weekly draw across commercial and strategic crude holdings – a very large draw that helps ease the supply disruption from the Middle East.
Equities: Equity markets fell yesterday, not because macro data disappointed, quite the opposite, but partly on negative news from the Middle East and a further rise in oil prices.
In our view, however, the pullback should be seen just as much in the context of the exceptionally strong rally over recent months. A modest setback does not change the underlying direction or the broader sentiment picture. When a rally has been so heavily led by tech and AI, a negative surprise from Broadcom will typically be enough to trigger some profit-taking. That looks more like a pause than a change in trend.
The fact that small caps outperformed large caps on a negative day is also telling. Right now, the market direction and the rotation beneath the surface remain heavily dependent on what happens in tech.
Most Asian markets are lower this morning, while European and US futures are also trading in negative territory.
FI and FX: Energy prices rose yesterday amid renewed tensions in talks between US and Iran. The price increase pushed up rates and yields in both the US and the euro area with the 10Y US Treasury yield inching back towards 4.50%. The USD outperformed the rest of the G10 with EUR/USD falling to 1.16, USD/JPY rising to 160 and USD/SEK climbing above 9.40.
Editorial note: This recovered market brief has been cleaned and reclassified by Next Move Markets for educational market intelligence. It is not investment advice.
Next Move Markets desk view
For active traders, this brief should be read through the lens of currency markets rather than as a standalone headline. The key question is whether the theme behind More US Jobs Data to Fuel Fed Hike Speculation can influence positioning beyond the first reaction. That means watching central-bank expectations, yield differentials, dollar momentum and risk appetite together, not in isolation.
A richer trading read comes from separating the catalyst from confirmation. The catalyst explains why markets are paying attention; confirmation comes from price action, liquidity and cross-asset behavior after the headline is digested. If those signals do not align, traders should treat the move as fragile and keep risk tighter.
What traders should watch next
- Whether the move is confirmed by the U.S. dollar index and short-term rate expectations.
- How London and New York liquidity react once the initial headline risk is absorbed.
- Whether price action respects the latest support and resistance zones instead of fading immediately.
- Any follow-up comments from central-bank officials or data releases that change the rate path.
Risk context
This article is a market-intelligence brief, not a trade recommendation. Before acting on the theme, traders should define invalidation, position size and the time horizon of the setup. The same headline can support a short-term reaction and still fail as a multi-session trend if liquidity, policy expectations or broader sentiment move the other way.
Scenario map
The base case is that traders keep this theme on the radar while waiting for confirmation from central-bank expectations, yield differentials, dollar momentum and risk appetite. A stronger continuation scenario requires follow-through after the first reaction, preferably with related assets moving in the same direction. A failure scenario develops if the headline is quickly absorbed, volatility fades and price returns inside the previous range.
For currency markets, the most useful approach is to compare the article theme with live market behavior. If the market confirms the narrative, pullbacks can become more constructive. If the market rejects it, the headline becomes background noise rather than a trading driver.
Execution discipline
- Define the level first: traders should know where the idea is invalidated before thinking about upside or downside.
- Separate news from setup: More US Jobs Data to Fuel Fed Hike Speculation may explain attention, but entry quality still depends on timing, liquidity and risk/reward.
- Watch confirmation: a clean move usually appears across related markets, not only in one isolated instrument.
- Control exposure: if volatility expands, smaller position sizing can be more professional than chasing the headline.
Next Move Markets treats this kind of brief as a starting point for preparation: identify the driver, map the scenarios, then wait for the market to prove which path is actually being priced.
