Currency news / May 2, 2025

China prepared to talk with US

3 min read Thanim Islam

Thanim IslamMay 2, 2025

Market snapshot:

Japan threatens to use bond holding as leverage
Dollar in focus with job numbers

Yesterday's currency recap

The dollar pushed on yesterday, taking advantage of flows out of the yen (after the BoJ interest rate meeting in the morning), better than expected ISM manufacturing numbers, and reports that the Trump administration has reached out to China to start tariff talks.

The EUR slid to its weakest level versus the GBP since 7th April, before recovering by the end of the day and sliding to a three-week low versus the USD. Markets are now pricing-in 4 additional rate cuts for the UK as concerns grow that weakness in the US economy may spread globally.

Today's GBP rates

Currency pair	Daily move*	Indicative rate**
GBPAUD	0.06%	2.0832
GBPCAD	-0.08%	1.8377
GBPCHF	0.22%	1.1037
GBPDKK	-0.08%	8.7769
GBPEUR	-0.08%	1.1761
GBPJPY	1.24%	193.025
GBPNOK	0.11%	13.8798
GBPNZD	0.16%	2.25
GBPSEK	0.65%	12.9645
GBPUSD	-0.50%	1.3268

*Daily move - against G10 rates at 7:30am, 02.05.25
** Indicative rates - interbank rates at 7:30am, 02.05.25

Key data points

Currency	Event	Period	Consensus	Previous
EUR	CPI MoM	Apr	47.90	49.00
EUR	CPI YoY	Apr	73.00	69.40
EUR	Core CPI YoY	Apr	45.00	45.20
EUR	Unemployment Rate	Apr	44.60	44.70
USD	Nonfarm Payrolls	Apr	138,000	228,000
USD	Unemployment Rate	Apr	4.20%	4.20%
USD	Average Hourly Earnings MoM	Apr	0.30%	0.30%

What we think

Some positive vibes to finish the week: there have been reports that China is assessing the possibility of trade talks with the US and equity futures are all pointing to a higher opening.

USD is slightly weaker this morning as Japan stated that holding US treasuries is a negotiation card in trade talks with Washington.

Today's non-farm payrolls will be the highlight, with economists expecting 138,000 new jobs for April - slower than March, but a fairly healthy reading. This could support the dollar but markets are expecting a lower reading in May due to the impact of tariffs.

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