Currency news

ECB cut, now over to US jobs

Head of FX Analysis at Equals Money
-
3
min read
Publish date
07/06/24
    • ECB give little guidance on future cuts
    • USD waits for job numbers


    Yesterday's currency recap

    As widely expected, the ECB cut interest rates from 4% to 3.75%, and as mentioned in our market reports, the Bank refrained from confirming more rate cuts are to come, citing that their forecast inflation wont return to its 2% target until 2026.

    EUR attempted to gain on the back of this, but gains were limited with markets now guessing when the next rate cut could come. US jobless claims came in higher than expected, highlighting again weakening of the jobs markets ahead of today's non-farm payrolls report.

    Today's GBP rates

    Currency pair Daily move* Indicative rate**
    GBPAUD -0.15% 1.9204
    GBPCAD -0.01% 1.7509
    GBPCHF -0.24% 1.1397
    GBPDKK -0.20% 8.7595
    GBPEUR -0.20% 1.1743
    GBPJPY -0.10% 199.4010
    GBPNOK 0.02% 13.5363
    GBPNZD -0.02% 2.0644
    GBPSEK 0.14% 13.3113
    GBPUSD -0.06% 1.2778

    *Daily move - against G10 rates at 7:30am, 07.06.24

    ** Indicative rates - interbank rates at 7:30am, 07.06.24

    Key data points

    Currency Event Period Consensus Previous
    EUR GDP QoQ Q1 Final 0.30% 0.30%
    EUR GDP YoY Q1 Final 0.40% 0.40%
    CAD Net Change in Employment May 25,000 90,400
    CAD Unemployment Rate May 6.20% 6.10%
    USD Non-farm Payroll May 185,000 175,000
    USD Unemployment Rate May 3.90% 3.90%
    USD Average Hourly Earnings YoY May 3.90% 3.90%

    Upcoming speeches

    • None today.

    What we think

    Last month's weaker-than-expected jobs report started off the month-long USD downtrend throughout May, so today's number could once again dictate the direction of travel for the greenback. Markets are expecting a slight pick up in job additions to 185,000 in May, up from 175,000 in April, but there calls from some investment banks to expect another lower-than number, which would follow the soft jobs data we’ve had all week. If so, we would expect markets to firm up the odds of a September cut, and thus see some USD weakness. Otherwise a strong number, and given how much USD has weakened over the last month, we could see demand for USD pick up again ahead of next week's CPI numbers and Fed meeting.

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    About the author
    Thanim Islam
    Profile
    Head of FX Analysis at Equals Money

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