US dollar heads towards weekly loss
The dollar is heading for a weekly loss today amid a weak US economic performance and little progress in trade talks with global partners.
Investors are closely assessing the US payrolls report released today to gauge the path ahead for the Fed’s monetary policies, with recent data so far showing the economy is facing increasing inflationary pressures and slower growth.
A slowdown in US job creations indicates that corporations remain uncertain and concerned about tariffs, but it likely won’t change the Fed’s cautious perspective.
Dollar No Longer a Haven?
The dollar is increasingly losing its global status as a safe haven as investors continue to flee US assets in droves.
The yen fell 0.35% today to 144.12 against the dollar, while the Swiss franc fell to 0.82.
Sterling fell 0.18% to $1.35 away from a three-year high but still heading for a 0.6% weekly profit.
The dollar index eked out some gains today to 98.9, but still headed towards a 0.5% weekly loss.
ECB’s Bullish Stance
The euro tapered off six-week highs, scaled after bullish remarks by ECB officials, with the price now down to $1.1423.
Traders now expect 25 basis points of rate cuts overall by the ECB by the end of the year, with some, such as Deutsche Bank, expecting double that amount.
Recent data showed German exports and industrial production weaker than expected in April, reflecting the challenges facing the economy.
Markets React to Trump-Xi Calls
Most currencies gained on the dollar on Thursday after the Trump-Xi phone call before giving up some of the gains.
However, the call didn’t provide much clarity with concerns still persistent on the future of trade negotiations between the two economies.
Gold climbs ahead of US payrolls data
Gold prices rose in European trade on Friday, resuming gains and approaching a four-week high once more, on track for a weekly profit.
The gains are curbed by the stronger dollar ahead of crucial US payrolls data later today.
The Fed depends on such data to decide on future monetary policies and interest rate decisions.
The Price
Gold prices rose 0.7% to $3375 an ounce, with a session-low at $3352.
On Thursday, the precious metal lost 0.55% on profit-taking away from a four-week high at $3403.
Weekly Trades
Gold prices are up 2.65% so far this week, on track for the second weekly profit in three weeks.
US Dollar
The dollar index rose 0.15% on Friday on track for the first profit in three sessions away from a six-week trough at 98.35 against a basket of major rivals.
The dollar is boosted as US-China trade tensions receded following the Trump-Xi phone call.
US Rates
Earlier US data showed the services sectors shrank for the first time in a year, while the private sector added far less jobs than expected last month.
According to the Fedwatch tool, the odds of a Fed 0.25% June interest rate cut stood at 2%, while the odds of a July rate cut stood at 24%.
Now traders expect 50 basis points of US rate cuts overall this year, starting October.
Later today, the payrolls report will be released, expected to show the addition of 126 thousand last month, while unemployment is expected unchanged at 4.2%.
SPDR
Gold holdings at the SPDR Gold Trust remained unchanged yesterday at 935.65 tons, the highest since May 13.
Euro gives up six-week high on profit-taking
The euro fell in European trade on Friday against a basket of major rivals, giving up a six-week high against the US dollar on profit-taking.
Despite the losses, the common currency is about to mark a weekly profit after the European Central Bank hinted at a pause in the year-long cycle of policy easing.
The dollar rebounded ahead of the crucial US payrolls report later today, which would provide important clues on the odds of future Fed rate cuts.
The Price
The EUR/USD rose 0.1% today to $1.1433, with a session-high at $1.1457.
The euro closed up 0.25% on Thursday against the dollar, marking a six-week high at $1.1495 following the ECB’s policy meeting.
Weekly Trades
The euro is up 0.8% so far this week on the dollar, on track for the second weekly profit in three weeks.
The ECB
The European Central Bank cuts interest rates to three-year lows at 2.15%, the seventh such rate cut in a row
The ECB expects government investments in defense and infrastructure to boost growth in the medium term, even as trade uncertainties continue to cloud business investments and exports in the short term
It expects real GDP growth at 0.9% in 2025, and 1.1% in 2026, and 1.3% in 2027.
It also expects inflation at 2.0% in 2025, then 1.6% in 2026, and back to 2% in 2027
Lagarde
ECB President Christine Lagarde hinted at the possible end of the current cycle of policy easing, which was in response to a combined shock such as the Covid 19 pandemic, the Ukrainian war, and the energy crisis.
European Rates
According to a Reuters source, most ECB members now aim at holding interest rates unchanged in July, with the global markets now expecting just an additional 25 basis points of rate cuts by the end of the year.
US Dollar
The dollar index rose 0.15% on Friday away from six-week lows at 98.35 against a basket of major rivals.
The path of the dollar next week will likely be determined by the all important US payrolls report today.
Wall Street declines after Xi-Trump phone call
US stock indices fell on Thursday as the markets assess the latest economic data, and after news about US President Donald Trump’s phone call with his Chinese counterpart Xi Jinping.
China’s foreign ministry stated that Trump was the one who called Jinping to discuss bilateral relations.
Earlier US data showed the commodities and services deficit in April shrank 55.5% m/m, reaching $61.6 billion, the lowest since 2023.
Otherwise, US unemployment claims rose by 8 thousand last week to 247 thousand, while analysts expected a drop of 3 thousand.
On trading, Dow Jones fell 0.3% as of 15:20 GMT to 42314 points, while S&P 500 shed 0.2% to 5957 points, as the NASDAQ dipped 0.2% to 19,420 points.