Good afternoon,

USD: Non-Farm employment data on Friday

We have the non-manufacturing PMI reading from May due out at 15:00. This will receive more attention than usual, following on from the US Markit Service data which missed expectations.

Thursday will attempt to set the tone for Friday’s Non-Farm employment data which is always a firm talking point for both economists and speculators. May’s data is set to drop from 263k jobs, to 185k jobs. Even with some wild results over the last few quarters, the Dollar market should remain level headed, looking for logical explanations where possible.

During the “Fed Listens” conference, there is a building appetite to cut rates. The June meeting remains a firm favourite for the Fed to signal their intention to taper rates over the remaining 2019 period. Jerome Powell’s opening paragraph was the giveaway, stating that they will “act as appropriate to sustain the expansion”.

GBP: UK market remains quiet

Mark Carney is speaking tomorrow morning. The next Interest Rate update is on the 20th June. With things on hold as Brexit takes another breather ahead of the next leadership race, we wouldn’t expect anything new or exciting to come out of the Bank of England.

Boris Johnson and 11 other candidates are slowly building their case to lead the United Kingdom through Brexit. The Conservative Party is likely to face short term extinction if they are unable to deliver the Brexit deal – whatever that may end up looking like in October.

Trump’s UK visit has brought a small glimmer of hope for future trade relations with the US. However, given the volatile nature of Donald and his current Trade War, I wouldn’t be surprised if this changed.

EUR: ECB and GDP combo

Tomorrow is a busy day for the Euro. We have GDP readings at 10:00 and the ECB’s Monetary Policy Statement at 13:30.

GDP is expected to hold firm at 1.2% YoY and 0.4% QoQ. The pressure from the Trade War will be slowly squeezing expectations and the resignation of Theresa May significantly raises the prospect of a no-deal/hard Brexit situation, putting both economies at risk.

During the ECB’s update, as usual, any hint towards a dovish stance will apply more pressure to the Euro. There is currently an easing bias in place, but inflation worries and a wider economic slowdown will provide talking points. Perhaps there is an opportunity for the Dollar to squeeze the Euro further and to give GBPEUR some upside potential.

Have a good week.