Markets are awaiting the release of U.S. non-farm payrolls data for May, which is expected to show a strong job market and could influence the Federal Reserve's decision on whether to raise interest rates in June.


Economists are forecasting U.S. non-farm payrolls to have grown by 180,000 in May. This would be similar to the 253,000 jobs added in April.

A strong jobs report could give the Fed more confidence to raise interest rates in June. The central bank has already raised rates 10 times since the end of the coronavirus pandemic, and it is expected to continue raising rates in an effort to combat inflation.

However, the Fed may also be concerned about the impact of higher interest rates on the economy. The central bank is trying to achieve a "soft landing," which means raising rates enough to slow inflation without causing a recession.

The release of the jobs report on Friday will be closely watched by markets. A strong report could push up bond yields and the dollar, while a weak report could weigh on stocks.

In addition to the jobs report, investors will also be watching other economic data this week, including inflation data from China and the Eurozone.

China is expected to release official PMI data on Wednesday, followed a day later by the private sector Caixin manufacturing PMI. The contraction in the manufacturing sector is expected to moderate slightly, while the rate of expansion in the stronger service sector is expected to slow.

The Eurozone is to release flash consumer price inflation data for May on Thursday which is expected to underline that the European Central Bank still has a long way to go in its battle to curb price pressures.

Headline inflation is currently running at 7% on a year-over-year basis, while underlying annual inflation is currently 5.4%, both well above the ECB’s 2% target.

At its most recent meeting earlier this month, the ECB reiterated that it was very much in rate-hiking mode, saying "more ground" needs to be covered to tame inflation.

Data last Thursday showed that Germany, the bloc’s largest economy, entered a recession in the first quarter as high inflation hit consumer spending.

Overall, markets are expected to be volatile this week as investors await the release of key economic data. A strong jobs report from the U.S. could push up bond yields and the dollar, while a weak report could weigh on stocks.