Markets shrug off Fed warnings, ahead of all-important Nonfarm Payrolls

The market mood is upbeat despite Fed warnings about financial risks and ongoing US-China tensions. Nonfarm Payrolls are set to show an increase of around one million jobs.

The Federal Reserve warned that covid still poses a major financial risk and that prices are vulnerable to significant declines. Stocks advance on Thursday as most Fed officials continued saying the US economy has a long way to go. Robert Kaplan, President of the Dallas Fed, stood out by urging a discussion about tapering bond-buying.

The US dollar has been edging lower as 10-year Treasury yields remain in low ground under 1.60%. Supply chain strains and skills shortage issues are pushing prices higher but also cooling the economy.

President Joe Biden is set to maintain bans on Chinese investment slapped by the previous administration, adding to tensions. In the meantime, Beijing reported better-than-expected increases in both imports and exports in April.

Nonfarm Payrolls: The US is expected to report an increase of 978,000 jobs in April, topping March’s 916,000 increase. Economists expect the Unemployment Rate to drop from 6% to 5.8% and earnings are projected to drop. Uncertainty about such robust hiring implies surprises are due, with some expecting 1.3 million positions gained. As of March, some 8.4 million Americans that lost their jobs in the pandemic are still out of work.

Canada also publishes its labor figures on Friday, and the economic calendar is pointing to a loss of 175,000 jobs, accompanied by an increase in the jobless rate to 7.8%. Low estimates come despite the broad recovery. USD/CAD is trading below 1.22 ahead of the release.

UK local elections: Investors are still waiting for the results of elections in Scotland, where pro-independence parties could clinch a majority, reopening the topic. Elsewhere, voters seemed to back Prime Minister Boris Johnson’s Conservative Party.

The Bank of England announced it is slowing down the pace of bond purchases but left the total unchanged. The pound traded choppily before stabilizing around 1.39.

Cryptocurrencies: Bitcoin is trading below $55,000, Ethereum around $3,4000 and XRP below $1.60 as digital assets are off their highs.

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