June 04, 2025

“Markets are keeping a low profile early Wednesday as investors await crucial data and events. Focus will be on the US private sector employment figures and ISM Services PMI for May, alongside the Bank of Canada’s policy announcement.”

Tim Hallinan – Trading Director

USD

Markets are cautiously optimistic ahead of the upcoming Trump-Xi call, which may give the dollar a short-term lift. However, with US tariffs on steel and aluminium now in effect, a meaningful trade breakthrough looks unlikely. Despite a late rise in Treasury yields, the dollar held firm, supported by strong April JOLTS data. Still, the report added little to the broader jobs outlook, with a tight labour market and easing wage pressures reflected in fewer resignations.

GBP

GBP/USD edged higher during Wednesday’s Asian session. The pair may gain more as the US Dollar comes under selling pressure from the ongoing “Sell America” trend, fuelled by rising tariff uncertainties that could impact US economic growth. However, optimism about possible Trump-Xi talks and the US-Canada trade deal could lend support to the dollar.

EUR

Today’s eurozone calendar is relatively quiet, featuring April industrial production and final May PMIs, while US and EU trade negotiators meet in Paris, an event that could attract some attention. Yesterday’s eurozone inflation data raised the likelihood of a more dovish tone from the ECB. Headline inflation dropped below the 2% target, and core inflation saw a notable slowdown from 2.7% to 2.3%. The EUR/USD pair is trading cautiously as the US Dollar stabilises amid optimism over the aforementioned Trump-Xi talks and the US-Canada trade deal. Focus now shifts to key US data releases, trade updates, and remarks from Federal Reserve officials.

Markets

European markets opened higher despite the introduction of President Donald Trump’s 50% steel tariffs on Wednesday. Shortly after the London opening bell, the pan-European Stoxx 600 was up nearly 0.3%. The German DAX led the gains, rising 0.6%, while the French CAC 40 increased by 0.3%, and the London FTSE 100 remained mostly flat. Most major sectors traded in positive territory.

Main Economic Events (All Times CET)

2:15pm: US ADP Non-Farms
3:45pm: Bank of Canada Rate Decision
4:00pm: US ISM Services PMI

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