A surprise uptick in eurozone CPI caused gains on EUR, casting some doubts over future rate cuts across this year. GBPEUR traded lower off recent highs, and EURUSD climbed up to the May highs. USD weakened after personal spending numbers came in lower than expected. The core PCE numbers came inline, doing very little to move rate expectations. GBP followed risk sentiment and with equities declining stateside, we saw general weakness on the currency. GDP numbers from Canada came in lower, causing a sharp sell off on CAD just after the release of the numbers.
*Daily move - against G10 rates at 7:30am, 03.06.24
** Indicative rates - interbank rates at 7:30am, 03.06.24
So expecting a quiet start to the week, with just the release of final manufacturing PMI numbers today. Focus for the rest of the week falls on US job numbers with the release of the JOLTs job openings, ADP and nonfarm payrolls (NFPs). Last month’s readings came in lower than expected, triggering a month long sell-off in USD throughout May. Anything to suggest the job market is weakening will be welcome news for the Fed, and will likely bring forward when the Fed are expected to cut.
The other major event will be the ECB meeting. Markets are expecting a 0.25% rate cut by the ECB, and this is largely priced in. Considering May's inflation numbers coming in higher and Q1 wage growth coming in higher, we could well see a hawkish cut by the Bank which should bode well for the EUR. The Bank of Canada are also expected to take similar action this week.
For GBP the only major data points will be the DMP inflation expectations, which will have implications on rate expectations.
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