Market Highlight 06.05.2026

The U.S April employment report due on Friday will help clarify whether the U.S economy remains resilient enough for the FED to maintain its current policy stance. If the labor market weakens, expectations of rate cuts could return, even though they had previously been largely priced out because of the war in Iran. Strong economic growth in the first quarter and concerns about war-driven inflation have led the market to expect that the FED will not deliver any further rate cuts this year. Earlier, the market had expected two 25-basis-point cuts in 2026. So far, there have been very few signs that policy easing is a top priority for FED officials.

However, even without the war in Iran, the FED does not appear to need further monetary easing. The U.S economy added 178.000 jobs in March, nearly three times the 60.000 forecast by economists, while the unemployment rate edged down to 4,3%. U.S GDP growth regained momentum in Q1/2026 as businesses stepped up investment in artificial intelligence, while Government spending recovered after a damaging shutdown period. Consumer spending has also remained stable, although households are having to pay more for fuel costs. If the Federal Reserve does decide to cut interest rates, it will not be because it receives good news on inflation, but because it receives bad news from the labor market.

The USD Index continued to decline early Wednesday after President D. Trump said the parties were still working toward an agreement to end the war in Iran. Domestically, interbank USD/VND fell by a further VND 10 yesterday and closed the day at 26.325.

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