The USD holds steady, oil prices are firm, equity markets are mixed, and US yields are rising as markets await details on US-China trade policy. The USD index edges higher in early trading as talks between Beijing and Washington continued for a second day, increasing optimism of easing tensions. The GBP weakened following a softer jobs report, boosting the prospect of a Bank of England rate cut. Global equities are mixed, with Australian, UK and Japanese markets outperforming their peers, and US futures slipped as investors await details on the Sino/US trade talks. Despite Monday's negotiations between China and the US not producing any breakthroughs, US officials remain optimistic that both sides could ease tensions over technology shipments and rare earth elements. Elsewhere, oil prices held steady amid Sino/US trade talks, Bitcoin firmed to $109.4k, while gold and silver prices eased in early trading. With the absence of economic data releases today, investors are expected to be sidelined ahead of Wednesday's key US inflation report.
In the news. Carney says Canada will hit the NATO spending target this year. The Trump administration is to deploy hundreds of Marines in LA. EU to 'step up' on cyber security as dependence on US laid bare. UK unemployment hits a 4-year high as pay growth cools. Japanese truck makers in $6bn merger to fight Chinese competition. Trump says China's not easy' as trade talks will resume on Tuesday. Saudi Arabian Crown Prince MBS gets a G7 invitation from Canada. Russia launches one of the war's largest air attacks on Kyiv. Huawei chips are one generation behind the US, but the firm is finding workarounds, ceo says. UK to invest 14.2 billion pounds in Sizewell C nuclear project.
In currency markets. Currency markets are sidelined due to the lack of significant economic data releases. Investors are focusing on Wednesday's US inflation report, which is expected to rise to 2.5% in May, up from 2.3% in April, as US consumers start to feel the impact of Trump tariffs. CNY and Asian currencies eased by 0.1% on average against the USD. Trading currencies came under pressure, with NOK falling 0.3%, CZK, JPY & DKK down 0.1%, CHF, MXN, AUD, NZD, ZAR, and SEK are flat against the USD.
In commodity markets. Oil prices up 0.1%. Natural Gas and Wheat prices weakened by 0.7%. Gold & Silver prices fell 0.15%. Copper prices weakened by 0.95%, and Soybean prices firmed by 0.25%.
CAD holds steady, pivoting at 1.3700, with investors sidelined by the absence of fresh economic data and caution amid the ongoing US and China trade talks. Domestically, markets are growing optimistic that backdoor negotiations between Carney and Trump on trade and security deals are progressing, with Carney stating that Canada will meet its NATO spending target in 2025 ahead of the G7 meeting on June 13th-15th. We expect investors to be sidelined ahead of tomorrow's US CPI report and CAD building permits.
EURCAD holds steady without any key EU & CAD economic data releases.
EUR straddles 1.1400, sidelined against the USD. The euro held steady in early trading, failing to advance despite a stronger-than-expected Eurozone Sentix investor confidence report. Investors remain cautious of the outcome of the US-China trade talks, which will help provide some guidance to EU negotiators ahead of their July 9th US/EU trade deadline. We expect the euro to continue to linger within its current trading range ahead of Wednesday's key US inflation report.
GBPEUR weakens following the weaker-than-expected UK jobs report.
GBP weakens to 1.3500 against the USD following the UK jobs report. The pound fell after the UK claimant count rose to 33.1k in May, after falling to 21.2k in April. The unemployment level plunged by the most in five years, and wage growth slowed more than forecast. The weaker jobs report pressured the pound, rallied UK bonds, and pushed the FTSE 100 to a fresh high on expectations that the Bank of England will deliver two more rate cuts in 2025. Intraday, we expect the pound to steady ahead of Wednesday's US inflation report.
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