Dollar Nears 8-Week Low Prior to Key U.S. Employment Data

GBP

GBP/USD is up and currently trading at 1.2800 (interbank). GBP/EUR is at 1.1750 (interbank).

The FTSE 100 dipped by 0.2% or 16.07 points to 8,269.27.

This morning, UK house prices slipped 0.1% month-on-month in May, signaling a stabilization in the housing market. The average house price stands at ￡288,688, up 1.5% annually.

While UK data has been limited this week, next week will bring the latest GDP and employment figures for the February-April period. Continuous decline in employment numbers could lead to early rate cuts by the BoE, affecting the Pound Sterling.

Investors will also monitor the UK Average Earnings data, reflecting wage growth. Strong wage growth in the UK has been a driving force behind high service inflation, posing a challenge for price pressures to return to the 2% target.

Today’s Events (GMT):

07:00- Halifax House Price Index (May) - Actual: 1.5% vs Forecast: 1.2%

EUR

EUR/USD is currently trading at 1.0900 (interbank).

Yesterday, the ECB slashed its record-high deposit rate by 25 basis points to 3.75%. Additionally, the ECB’s Main Refinancing Operations Rate dropped from 4.5% to 4.25%. However, uncertainty remains about inflation, which has significantly slowed in recent months.

Although the ECB left room for further adjustments in July, influential policymakers like Isabel Schnabel and Klaas Knot have advocated for a pause next month.

This morning, Germany’s industrial sector continued to contract in April, with industrial output declining 0.1% month-month against expectations. German Industrial Production fell at an annual rate of 3.9% in April.

Today will see the release of the latest Eurozone Gross Domestic Product (GDP) figures for the first quarter (Q1). Eurozone GDP is expected to grow 0.3% QoQ and 0.4% YoY in Q1, unchanged from the previous reading.

Today’s Events (GMT):

07:00 - German Industrial Production (Apr) Actual: ?-0.1% vs Forecast: 0.1%

09:00 - ECB's Schnabel Speaks

10:00 – GDP – Forecast: 0.4%

11:00 - European Parliament Elections

15:15 - ECB President Lagarde Speaks

USD

The dollar index, measuring the currency against a basket of other major currencies, has declined to 104.10, close to this week's low of 103.99, marking the first time it broke below 104 since April 9.

For the week, the index was on track for a 0.54% slide following weaker macro data, prompting speculation of two quarter-point Fed rate cuts this year.

Yesterday, the US Department of Labor reported that the weekly Initial Jobless Claims rose by 229,000 from the previous reading, above the market consensus.

Today, all eyes will be on the latest US employment figures. Non-farm payrolls data is expected to show 185,000 job additions in May, while the Unemployment Rate is forecast to remain steady at 3.9%.

Today’s Events (GMT):

13:30 - Average Hourly Earnings (May) – Forecast:3.9%

13:30 - Nonfarm Payrolls (May) – Forecast: 182K

13:30 - Unemployment Rate (May) – Forecast: 3.9%

CAD

USD/CAD is currently trading at 1.3673 in the interbank market. The Canadian dollar dropped sharply after the BoC decision to cut rates by 25 bps to 4.75% earlier this week.

Yesterday, Canada’s Ivey Purchasing Managers Index (PMI) fell to 52.0 in May, a sharp pullback from the previous two-year high.

Brent oil crude has risen 0.2% to $80.07 a barrel, while West Texas Intermediate crude (WTI) has risen 0.4% to $75.56 a barrel.

Today, Canada will publish its latest unemployment figures. The Canadian labour market report is expected to show 22.5K jobs added in May vs. 90.4K in April, with the unemployment rate ticking higher to 6.2%.

The BoC is closely monitoring underlying inflation data and wage growth, making average hourly earnings in the report significant to watch.

Today’s Events (GMT):

13:30 - Employment Change (May) – Forecast: 24.8K

13:30 - Unemployment Rate (May) – Forecast: 6.2%

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