June 06, 2025

“As expected, the ECB cut rates by 25bp to 2% after cooling inflationary pressures. The focus today will be the Non-Farm Payrolls jobs report with investors apprehensive following consecutive softer U.S. economic data.”

Tim Hallinan – Trading Director

USD

Following a public feud between Musk and President Trump, Tesla’s stock price plummeted over 14%, erasing approximately $153 billion in market value. The conflict escalated after Musk criticized Trump’s $2.4 trillion tax bill, which proposed eliminating clean energy tax credits. The dispute has raised concerns about governance and policy being sacrificed to personal animosities, with potential implications for markets. The main event today is the release of the May NFP jobs report. Jobs growth has been holding up reasonably well so far this year, but investors be closely watching for signs that April tariff uncertainty is prompting layoffs. Any positive surprise could see the dollar rally with the market currently expecting a soft number today especially on the back of soft ISM business surveys this week.

GBP

GBP/USD has demonstrated considerable gains; a noticeable portion has been sterling-driven due to UK’s robust economic performance and improved trade relations with the United States. A significant factor contributing to this strength is the exclusive steel and aluminium tariff agreement between the UK and the US, which has bolstered investor confidence in the pound. Conversely, disappointing ADP employment figures and a contracting ISM services index, has contributed to dollar softness, pushing the US Dollar Index to seven-week lows. The Outlook appears promising, with the pair testing the current resistance level. A softer than expected May NFP jobs report could see further dollar weakness.

EUR

The European Central Bank (ECB) has reduced its deposit rate to 2%, the lowest since December 2022, marking the eighth consecutive rate cut since June 2024. This move reflects the ECB’s response to declining inflation and economic uncertainties, particularly stemming from U.S. trade policies. ECB President Christine Lagarde stated that “we are getting to the end of a monetary policy cycle”. Following Lagarde’s remarks, the euro strengthened against the U.S. dollar. While the market had previously anticipated a potential rate cut later this year, expectations have now pushed it back with a 25-basis point cut projected for October instead of September.

Markets

Asian shares slipped on Friday as investors look towards U.S. payrolls report, while Tesla’s shares tumbled a overnight following the public end of the Trump-Musk bromance. The S&P 500 sold off 0.5% yesterday, prompted by weaker US labour market data, while the news that Trump and Xi held a call to discuss trade policy did little to improve risk sentiment. The Fed has said it stands ready to act should the jobs market deteriorate following consecutive soft U.S. economic data combined with concerns about stagflation and the economic impact of tariffs

Main Economic Events (All Times CET)

2:30pm: US Non-Farm Payrolls
2:30pm: Canadian Employment Change

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