Good morning,

USD: Employment data and Tariffs the order of the day

US labour data is due out at 13:30 so be on standby for extended volatility in the afternoon – The FOMC members have signalled that they are open to changing the current rate policy, but this is reliant on live market data.

The Dollar remains cautiously optimistic about the current Trade War climate, but we seem unable to get through a working day without backlash comments. Currently, Trump has threatened to put a 5% levy on Mexican produce, starting Monday. After the G20 meeting, Trump will decide on whether he will deploy a further 325 billion dollars’ worth of tariffs on Chinese imports. Trump has been using his assumptive closing technique predicting that both sides would definitely reach an agreement.

June will be the most important month for the Dollar’s outlook with interest rates and Trump’s meeting with Xi dominating the sentiment.

EUR: ECB inflation disappoints

German industrial production was down to 1.9% vs 0.5% in April, and Trade Balance was down to €17.0B € vs €20.0 In April. Despite the current concerns over the economic powerhouse that is Germany, Euro pairs this morning remain unchanged.

The ECB update was somewhat of a mixed back, which shouldn’t be too much of a surprise. Their forward guidance on current conditions extends out through the first half of 2020. A possible rate cut or the re-introduction of QE has been discussed, so longer term Euro buyers and sellers will need to keep a close eye on future meeting minutes. There’s currently a 50/50 chance of a 10 basis point rate cut in September this year.

Have a good day and a great weekend.