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Here is what you need to know on Friday, May 8:

The market mood is upbeat, with stocks, oil, and commodity currencies rising against the safe-haven dollar and yen. Speculation about negative interest rates in the US and a Sino-American detente is behind the move ahead of a horrible Non-Farm Payrolls report. 

US and Chinese trade negotiators have held a conference call and discussed the implementation of the Phase One agreement. According to reports in the Chinese press, they took stock of coronavirus’s impact and agreed there has been good progress. On the other hand, White House adviser and China hawk Peter Navarro renewed his criticism on Beijing. 

Federal Reserve fund futures are pointing to negative interest rates in early 2021, with record lows for two-year yields. While officials at the central bank have repeatedly rejected going below zero, the projection in markets has been weighing on the dollar. 

Non-Farm Payrolls: April’s employment report may show a loss of some 22 million jobs, with the unemployment rate reaching Great Depression levels. Estimates range from -8.6 to -30 million. Markets may see through the figures and dissect the report to see if the damage is short-term – such as in restaurants – or long-term, spreading to all sectors. 

See:

  • Non-Farm Payrolls Preview: Emotions or facts for the markets
  • Nonfarm Payrolls Preview: Outrageous employment collapse priced in?

Canada will also publish its labor market figures for April, with the jobless rate potentially leaping to 18% amid losses of 4 million positions. The government in Ottawa took measures to keep people at work, and their success will be tested now.

See Canada Employment Preview: The US wins the impact duel in unemployment reports

UK: Government officials are trying to play down expectations for a significant easing, contrary to hopes expressed in the British press. Prime Minister Boris Johnson will address the nation on Sunday evening.

The Bank of England left its interest rate and QE policies unchanged but two out of nine members prefer expanding the bond-buying scheme and Governor Andrew Bailey said such a move is on the cards for the June meeting. GBP/USD took a dive below 1.23 but is back to battling 1.24.

EU finance ministers meet today amid uncertainty about Europe’s policy response. Christine Lagarde, President of the European Central Bank, vowed to do whatever is necessary, including unconventional policies. She rejected the German constitutional court’s ruling earlier this week, which cast doubt about future Quantitative Easing. EUR/USD has bounced from the lows and returned to the 1.0850 region. 

Australian officials have presented a three-phase plan to return to normal. The Australian and New Zealand dollars have enjoyed their success against COVID-19 and the risk-on mood. Both AUD/USD and NZD stand out with substantial gains. 

Oil prices have been consolidating their gains amid expectations for a rebound in demand as economies reopen. 

Cryptocurrencies have been extending their gains, with Bitcoin nearing the $10,000 level.

Friday is a public holiday in the UK and France, potentially impacting volume. 

More The cure for high prices is high prices, will markets ignore also the Non-Farm Payrolls?