Morning Report
July 04, 2025
“A strong non-farm payrolls report triggered some dollar volatility yesterday, but ultimately it was not enough to turn around its fortunes. The attention has quickly shifted to the future, and in particular Trump’s plans ahead of the July 9th tariff deadlines.”
Tim Hallinan – Trading Director
USD
A strong non-farm payrolls print was not enough to halt the bearishness on the dollar and produced only a temporary reprieve yesterday. The 147K print was well clear of the 106K estimate, but the initial 0.5% rally had been all but wiped out by this morning. It raises questions about what it will take to stop investors from shifting away from the dollar, and it probably reflects the nervousness surrounding the 9th July ‘liberation day’ tariff deadline and Trump’s claim yesterday that they would begin sending out tariff letters to countries as soon as today. There is no data today as it is Independence Day in the US, so the focus will be on Trump and his trade decisions.
GBP
Sterling has recovered around 0.7% since its trough on Wednesday when the markets were convinced that Reeves was about to lose her job. That appears to be in the rearview mirror already, though the pound has still taken some reasonable damage from the new £5bn hole in the nation’s finances. GBPEUR in particular spent some time in the 1.15s – we were above 1.20 earlier this year – and is struggling to break back into the 1.16s this morning. Today’s diary is relatively quiet, but we do get a construction PMI and a speech from the BoE’s Taylor.
EUR
The euro continues to follow the whims of the US dollar. Non-farms triggered a sharp drop for a very brief period yesterday, but the momentum is firmly upward again this morning. EURUSD will be all about tariffs once again over the coming days, though we do have some PPI inflation data this morning from the eurozone. France posted some weak industrial and manufacturing data earlier today.
Markets
The momentum in stocks diverged between the US and Europe yesterday – the S&P 500 and the Nasdaq both climbed nearly 1% as the likes of the Euro Stoxx 50 sank almost the same amount. Nervousness around tariffs is likely to drive a weak open in Europe this morning, and the US is closed of course for 4th July.
Main Economic Events (All Times CET)
9:00am: Switzerland Unemployment Rate
11:00am: Eurozone PPI
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