Market risk sentiment showed resilience as better-than-expected U.S. job data offset trade war concerns, while central banks prepared for policy shifts amid disinflationary pressures.
Here are headlines you may have missed in the last trading sessions!
Headlines:
- Australia current account for Q1 2025: -14.7B (-7.6B forecast; -12.5B previous)
- Australia business inventories for Q1 2025: 0.8% q/q (0.3% q/q forecast; 0.1% q/q previous)
- RBA meeting minutes showed that the Board considered both 25bps and 50bps rate cuts, but saw a stronger case for cautious and predictable policy
- BOJ Gov. Ueda prefers not having “preset ideas” when making policies, while trade policy uncertainties remain high
- China Caixin manufacturing PMI for May: 48.3 (50.7 forecast; 50.4 previous)
- Swiss consumer price index for May: 0.1% m/m (0.1% m/m forecast; 0.0% m/m previous); -0.1% y/y (-0.2% y/y forecast; 0.0% y/y previous)
- Euro Area unemployment rate for April: 6.2% (6.2% forecast; 6.2% previous)
- Euro Area consumer price index flash for May: 1.9% y/y (2.1% y/y forecast; 2.2% y/y previous); 0.0% m/m (0.1% m/m forecast; 0.6% m/m previous); Core inflation at 2.3% y/y (2.5% y/y forecast; 2.7% y/y previous)
- OECD slashed global growth forecasts to 2.9% from 3.1% for 2025, citing Trump’s trade war impact
- U.S. JOLTs job openings for April: 7.39M (7.05M forecast; 7.19M previous)
- U.S. factory orders for April: -3.7% m/m (-2.2% m/m forecast; 3.4% m/m previous)
- U.S. RCM/TIPP economic optimism index for June: 49.2 (48.3 forecast; 47.9 previous)
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Oil prices popped about 2%, hitting their highest levels in two weeks. The move was fueled by lingering tensions between Russia and Ukraine, as well as speculation that Iran might reject a peace deal with the U.S. Wildfires in Canada contributed to the rally, knocking out around 350,000 barrels a day, roughly 7% of the country’s output. But gains faded later despite an increase in API crude stocks, possibly due to OPEC+ signals to boost production and fresh trade war fears weighing on demand outlook.
U.S. bond yields barely budged, holding near 4.46%. Yields ticked higher early on as investors moved into safety after OECD growth forecasts were trimmed, but reversed course when a stronger-than-expected US job openings report eased growth concerns in the US session.
Bitcoin climbed 1.3% to $106,307 as investors got a bit bolder after strong U.S. jobs data and renewed hopes for better trade relations.
Over in Europe, stocks ended modestly higher after a sluggish start. The main European index inched up 0.09%, while Germany’s market added 0.67%. Cooler inflation readings boosted rate cut hopes and helped balance out trade war jitters.
Wall Street also had a good day, with the Nasdaq up 0.8% and the S&P 500 up 0.6%, both closing at their best levels in more than three months. Tech and energy stocks led the charge after the upbeat jobs report.
Not surprisingly, gold slipped 0.8% to $3,350 after flirting with four-week highs earlier in the session, likely as investors took profits, pulled back from safe haven plays, and bought the US dollar following the strong labor data.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Majors Chart by TradingView
The dollar had a wild ride on Tuesday, starting weak but finishing strong as markets digested mixed economic signals and central bank commentary.
Early in the Asian session, the Greenback tumbled to a six-week low as traders worried about poor U.S. economic data and escalating trade tensions with China. However, USD began recovering around the Hong Kong and China market open, suggesting some regional buying interest and potential profit-taking ahead of this week’s catalysts.
The selling pressure popped up again in early European hours as cooler inflation data improved the appetite for “riskier” assets. Euro Area inflation missed estimates at 1.9%, while Swiss prices actually fell 0.1%, raising expectations for more aggressive rate cuts from the ECB and SNB. BOE officials continued signaling lower rates ahead, with Governor Bailey warning that growth risks aren’t showing up in official data yet.
Even the RBA showed caution, with meeting minutes revealing they considered a larger 50 basis point cut before settling on 25 bps to maintain predictability. Meanwhile, BOJ Governor Ueda kept markets guessing, saying there’s no preset plan for rate hikes.
The dollar saw renewed bullish pressure a few hours before the U.S. session, which proved prescient when the JOLTS job openings data surprised to the upside, jumping to 7.391 million in April versus expectations of a decline. This reinforced the Fed’s view that the labor market remains healthy, giving dollar bulls renewed confidence.
By the close, USD had recovered most of its early losses, benefiting from both stronger domestic data and dovish signals from other major central banks.
Upcoming Potential Catalysts on the Economic Calendar:
- Australia AIG industry index for May at 11:00 pm GMT
- Australia S&P Global services PMI final for May at 11:00 pm GMT
- Australia AIG construction and manufacturing indices for May at 11:00 pm GMT
- Japan Jibun Bank services and composite PMIs final for May at 12:30 am GMT
- Australia GDP growth rate for Q1 2025 at 1:30 am GMT
- Germany HCOB services PMI final for May at 7:55 am GMT
- Euro Area HCOB services PMI final for May at 8:00 am GMT
- U.K. S&P Global services PMI final for May at 8:30 am GMT
- U.S. MBA mortgage applications and 30-year mortgage rate for May 30 at 11:00 am GMT
- U.S. ADP national employment report for May at 12:15 pm GMT
- Canada labor productivity for Q1 2025 at 12:30 pm GMT
- U.S. Fed Bostic speech at 12:30 pm GMT
- Canada S&P Global services PMI for May at 1:30 pm GMT
- Canada BOC interest rate decision for June 4 at 1:45 pm GMT
- U.S. S&P Global services PMI final for May at 1:45 pm GMT
- U.S. ISM services PMI for May at 2:00 pm GMT
- Canada BOC press conference at 2:30 pm GMT
- U.S. EIA crude oil stocks change for May 30 at 2:30 pm GMT
- U.S. Fed Cook speech at 5:00 pm GMT
- U.S. Fed Beige Book at 6:00 pm GMT
Heads up! European trading could stay cautious today with final services PMIs from Germany, the Euro Area, and the U.K., but big moves are unlikely without surprises.
In the U.S. session, watch for volatility as ADP jobs data, ISM services PMI, Fed speeches, and the Beige Book roll out, all offering fresh clues on the economy and interest rate path.
Meanwhile, the BOC is expected to keep its interest rates steady this month, although the door may remain open for cuts later this year if inflation cools and economic growth loses momentum.
As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!
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