Geopolitical tensions were in the spotlight for the most part of the day, followed a bit more progress in trade talks and another round of soft U.S. data.
Here are headlines you may have missed in the last trading sessions!
Headlines:
- New Zealand Electronic Retail Card Spending for May 2025: 0.9% y/y (0.1% y/y forecast; -0.3% y/y previous)
- New Zealand Electronic Card Retail Sales for May 2025: -0.2% y/y (0.2% y/y forecast; 0.0% y/y previous)
- CBS quoted official sources citing that Israel is gearing up to launch an operation in Iran
- U.S. and Iran reportedly getting ready for a nuclear deal meeting over the weekend
- U.K. RICS House Price Balance for May 2025: -8.0% (-4.0% forecast; -3.0% previous)
- Japan BSI Large Manufacturing for June 30, 2025: -4.8% q/q (-0.7% q/q forecast; -2.4% q/q previous)
- Australia Consumer Inflation Expectations for June 2025: 5.0% (4.0% forecast; 4.1% previous)
- Chinese Foreign Ministry reiterated they always honor their commitments, already started issuing some licenses on rare earths exports
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Less dovish to neutral comments from ECB officials:
- Villeroy reiterated they have no fixed position on future policy decisions
- Simkus noted that the central bank arrived at neutral position on rates
- Schnabel acknowledged that easing cycle is coming to an end, core inflation elevated but on a good path
- U.K. Manufacturing Production for April 2025: -0.9% m/m (-0.4% m/m forecast; -0.8% m/m previous); Industrial Production for April 2025: -0.3% y/y (-0.4% y/y forecast; -0.7% y/y previous); -0.6% m/m (-0.2% m/m forecast; -0.7% m/m previous)
- U.K. Goods Trade Balance for April 2025: -23.21B (-20.0B forecast; -19.87B previous)
- U.K. GDP for April 2025: 0.9% y/y (1.0% y/y forecast; 1.1% y/y previous); -0.3% m/m (0.0% m/m forecast; 0.2% m/m previous)
- U.S. Initial Jobless Claims for June 7, 2025: 248.0k (250.0k forecast; 247.0k previous)
- U.S. Producer Prices Index Growth Rate for May 2025: 0.1% m/m (0.1% m/m forecast; -0.5% m/m previous); 2.6% y/y (2.3% y/y forecast; 2.4% y/y previous); Core Producer Prices Index Growth Rate for May 2025: 3.0% y/y (3.1% y/y forecast; 3.1% y/y previous); 0.1% m/m (-0.1% m/m forecast; -0.4% m/m previous)
- Trump mentioned he wants to have an agreement with Iran and avoid conflict, warned that auto tariffs may go up again
- Germany Current Account for April 2025: 23.5B (29.5B forecast; 34.1B previous)
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Middle East tensions were front and center during Asian session trading, following reports from the previous trading session citing that the U.S. government ordered an evacuation of their staff from areas placed on high alert.
Risk assets like bitcoin and equity futures, along with Treasury yields and the dollar, edged gradually lower while safe-haven gold and crude oil were elevated, with the latter propped up by expectations of supply disruptions on potential attacks. However, the energy commodity soon joined higher-yielding holdings in the selloff, as a CBS report cited sources saying that Israel is gearing up to launch a military operation in Iran.
It didn’t help that Trump later on threatened to impose tariffs unilaterally within two weeks, triggering another wave lower for commodities and U.S. assets before gold managed to extend its climb. European indices turned lower, with the German DAX down 1.0% and the French CAC lower by 0.7%.
Data from the U.S. came in weaker than expected, with the PPI report highlighting soft price pressures despite tariffs and the initial jobless claims still reflecting weaker labor market conditions for the third week in a row. U.S. equities were able to pull higher upon seeing the downbeat numbers, though, as these fueled the dovish Fed narrative after yesterday’s CPI release.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Majors Chart by TradingView
The U.S. dollar started off on wobbly footing, carrying on with its post-CPI slump versus JPY, CHF, and GBP during the early Asian session before picking up on some safe-haven flows against AUD and NZD on reports that Israel is getting ready to strike Iran.
Safe-haven flows appeared to favor USD when Trump threatened to impose tariffs unilaterally in two weeks, before the currency staged a broad selloff for the first half of the London session. Sterling suffered additional blows on account of net negative data points, particularly a sharper than expected GDP contraction for May, but still managed to join the rest of the major currencies in advancing versus the dollar later on.
Uncle Sam printed another set of weaker than expected figures, this time in the form of lower PPI figures and a higher than expected weekly jobless claims reading, reinforcing expectations of additional Fed rate cuts later in the year. Profit-taking appeared to set in quickly, spurring a rebound then further consolidation for USD towards the end of the session as it still closed lower across the board.
Upcoming Potential Catalysts on the Economic Calendar
- Japan Industrial Production Final at 4:30 am GMT
- Japan Capacity Utilization Rate at 4:30 am GMT
- Japan Tertiary Industry Activity Index at 4:30 am GMT
- Germany Consumer Price Index (Final) at 6:00 am GMT
- Germany Wholesale Prices at 6:00 am GMT
- France Consumer Price Index (Final) at 6:45 am GMT
- Euro area Trade Balance at 9:00 am GMT
- Euro area Industrial Production at 9:00 am GMT
- Canada New Motor Vehicle Sales at 12:30 pm GMT
- Canada Capacity Utilization Rate at 12:30 pm GMT
- University of Michigan Consumer Sentiment Index at 2:00 pm GMT
The eurozone’s calendar is a bit more busy today, with Germany and France releasing the final versions of their CPI readings, and the region printing its trade balance and industrial production reports.
After that we’ve got the June UoM consumer sentiment index and inflation expectations providing early insights into U.S. spending and price trends for the month, so keep an eye out for additional volatility around this release.
As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!
