August 05, 2025

“Markets have calmed after the non-farms shock, and now they are gearing up for a US ISM services print, further news on trade, and the Bank of England decision.”

Sam Cornford – Head of Trading

USD

The dollar has settled this week after the non-farm payrolls shock saw it tumble late on Friday. The headlines at the moment are again saturated by Trump’s trade policy, with several countries in the spotlight over his latest tariff threats. He told India that he would be ‘substantially raising’ their tariff rate in response to their purchases of Russian oil, arguing that they were funding the war machine in Ukraine. Switzerland is also reeling from a shock 39% tariff that has panicked both markets and politicians, the latter of which have promised to significantly improve the terms offered to the US in negotiations. Brazil also faces a 50% tariff as Trump continues to use trade policy as a tool of manipulation – in this case to prevent the prosecution of former president Bolsonaro.

Today’s main event is the ISM services index. The market is pricing in more than two rate cuts before the end of the year, based on the idea that the labour market is not nearly as solid as was previously thought – the growth cues in the services survey will be key for the dollar.

GBP

Sterling is in consolidation mode in the lead-up to the Bank of England decision on Thursday. There are a couple of final revisions to the July PMIs this morning and some data on the construction sector tomorrow, but the key event for the pound will be how the BoE lays out the economic outlook in a couple of days.

EUR

It’s a quiet week in the eurozone and it will be down to the US data and Trump to get the euro moving today. There is some June PPI data today, which is expected at 0.6% and should reconfirm for policymakers that the fight against inflation is done. Markets are not yet fully convinced by the idea of another rate cut from the ECB, but a downside surprise here could increase those chances.

In Switzerland, the franc has come under pressure this week as Trump’s 39% tariff threat has shocked markets. EURCHF has gained nearly 1% so far this month, although it is sounding increasingly likely that a trade deal can be signed quite quickly.

Markets

Stocks have found a way to interpret Friday’s bad news on jobs as good news for earnings, thanks to rising bets on Federal Reserve rate cuts. Strong earnings have also helped Europe to gain for a second consecutive day, while US futures are up marginally this morning.

Main Economic Events (All Times CET)

4:00pm: US ISM Services PMI

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