A better than expected April Nonfarm Payrolls report is good news for the US economy and the US dollar. It has set the scene for a bullish week ahead for the US dollar which is seen outperforming against most currencies, says Steen Jakobsen, Chief Economist at Saxo Bank.

Recent US data indicates that the US economy is marginally improving, while Europe keeps lagging, thereby increasing the growth differential. This was confirmed by the release of revised down growth projections for the Eurozone by the European Commission this week. Coupled with the European Central Bank's rate cut this week it is difficult to see where support for the euro will come from.

Week ahead

For the week ahead Steen sees the following issues and events in focus:

• US: Market chatter about whether the Federal Open Market Committee will reduce its purchases in the market place.
• Europe: Discussion about why Europe is lagging so much behind the US and whether US growth will benefit European export companies, plus more talk of the need for overall reforms.
• Australia: Expectations about the Reserve Bank of Australia cutting its benchmark cash rate by 25 basis points and the pressure this puts on the Australian dollar.