June 27, 2025

“The move in EURUSD since Trump was inaugurated extended to nearly 15% after yesterday’s gains. The dollar stabilised overnight, and the focus today will be on the core PCE inflation figure for May.”

Tim Hallinan – Trading Director

USD

The dollar stabilised at a three-year low yesterday as markets fretted about Fed independence and tacked on another cut to the rates profile over the next 12 months. The data lacked a clear signal, with Q1 GDP being revised down to an annualised -0.5% contraction and initial jobless claims printing a touch lower than expected at 236K. Fed speakers did not particularly satisfy the market’s more dovish expectations, though Daly did admit that there is increasing evidence that the tariffs might not spike inflation as much as feared. We get the Fed’s preferred gauge of inflation – core PCE – today, which is expected to produce another soft 0.1% month-on-month print in May. A downside surprise here could add the dollar’s woes. Today’s speakers include Hammack, Kashkari, and Williams. In Canada, meanwhile, investors will be looking at a GDP print for April.

GBP

Sterling broke firmly into the 1.37s yesterday and is heading for its best week since March. It is worth wondering whether it can really hold on this given the lack of positive news from the UK – it is entirely dependent on a weak dollar here. But with the market seemingly keen to keep pushing the greenback lower, 1.40 is not a significant jump away from here. No UK data today, but there will be some focus on politics, where Starmer is set to dilute planned welfare cuts to quell a rebellion within the Labour party.

EUR

A couple of modest upside surprises on the first preliminary June CPI figures have put the euro on the front foot this morning. The French figure came in at 0.9%, versus 0.8% expected, and Spain’s printed at 2.2%, up from 2.0% in May. The market is pricing in only one further cut from the ECB, with it likely to come in either the September or October meetings. The eurozone-wide inflation figure comes on Tuesday. Today, we get some confidence figures and we hear speeches from Rehn, Villeroy, and Cipollone.

Markets

A buoyant mood for equities saw the S&P 500 inch ever closer to the record highs it last set back in February – an incredible move given the 21% drop post-‘liberation day’. It rose 0.8% yesterday and futures are up another 0.3% this morning.

Main Economic Events (All Times CET)

8:45am: French CPI
9:00am: Spanish CPI
2:30pm: Canadian GDP
2:30pm: US Core PCE Inflation

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