Risk appetite got a hit yesterday as an army of Federal Reserve (Fed) speakers sounded cautious about the timing of the first rate cut and as the barrel of Brent spiked past the $90pb level on rising tensions between Iran and Israel after Israel bombed the Iranian embassy in Damascus earlier this week.

The latest spike in oil prices will be reflected in the upcoming inflation reads and may derail the Fed from its ‘three rate cuts’ plan for this year.

Today, all eyes are on the US jobs data, that should distinguish between those expecting that the Fed will cut interest rates three times this year and those who bet that the Fed will barely cut the rates with strong growth and rising inflation. Another higher-than-expected NFP and hotter-than-expected wages growth could lead to a further pullback in dovish Fed expectations, weigh on stock and bond valuations and boost the US dollar.

Elsewhere, the European Central Bank (ECB) minutes hint at upcoming rate cut, while falling Swiss inflation backs further Swiss National Bank (SNB) easing, convincing carry traders to move from the yen to Swiss francs for funding their trades.

This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

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