June 05, 2025

“With markets certain of a 25-basis point rate cut by the ECB, the primary focus today will be the European Central Bank (ECB) press conference, where attention will centre on any guidance provided regarding future Eurozone interest rate decisions.”

Sam Cornford – Head of Trading

USD

The U.S. dollar weakened following disappointing economic reports, including a lower-than-expected ISM Services and a weak ADP jobs report. The ADP report revealed that private employers added only 37,000 jobs in May, the lowest increase since March 2023, falling short of expectations. This data, combined with concerns about stagflation and the economic impact of tariffs, has heightened market apprehension. The U.S. dollar remains vulnerable to further declines if upcoming economic data continues to disappoint. Expectations of a potential Federal Reserve rate cut in September and concerns over the U.S. fiscal deficit and trade policies are mounting pressure on the currency.

GBP

GBP/USD remained resilient, bolstered by recent signs of weakness in U.S. economic data that have undermined the strength of the U.S. dollar. Notably, the UK’s exemption from the U.S.’s 50% steel and aluminium tariffs has further supported the pound’s position. A dollar-negative U.S. Nonfarm Payrolls (NFP) report could push GBP/USD through the 1.36 threshold

EUR

The primary focus today will be the European Central Bank (ECB) rate decision which is widely anticipated to implement a 25-basis point rate cut, reducing the deposit rate to 2.0%. This marks the eighth reduction in the current cycle, aiming to support the eurozone economy amid declining inflation and economic challenges, including the impact of U.S. trade tariffs. The euro has shown modest gains in the current soft dollar environment, with G10 commodity currencies emerging as the strongest performers against the dollar over the past week. Looking towards the ECB press conference, attention will centre on any guidance provided regarding future Eurozone interest rate decisions. A dovish ECB stance today could briefly push the EUR/USD pair below the 1.14 level. Despite this potential dip, increased buying interest is expected to emerge around this level, especially ahead of a potentially dollar-negative U.S. Nonfarm Payrolls (NFP) report.

Markets

There was a subdued mood to investor confidence for much of yesterday. At the closing bell the S&P 500 was flat on the day. Asian equities edged upwards, while the U.S. dollar remained subdued ahead of the European Central Bank’s (ECB) anticipated policy announcement amidst ongoing global trade tensions.

Main Economic Events (All Times CET)

8:00am: Swedish CPIF Inflation
2:15pm: ECB Rate Decision
2:30pm: US Jobless Claims

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