The primary catalyst today will be the US labour market data. According to Reuters, the US economy is expected to have added 85,000 jobs in May, representing a slowdown from April’s 115,000, while the unemployment rate is forecast to remain unchanged at 4.3%.
A “slow-hire, slow-fire” equilibrium continues to anchor the US labour market, keeping conditions stable enough for the Federal Reserve to maintain its higher-for-longer stance. In fact, market pricing from the Fed funds futures market currently reflects a roughly 60% probability of a 25-basis-point hike by the Fed at its December 2026 meeting under new Chair Kevin Warsh.
Earlier this week, mixed signals, from stronger ADP and JOLTS data to an uptick in weekly jobless claims (225K), have kept traders cautious, clipping the USD slightly in recent sessions.
On the other side of the Atlantic, the Euro is being supported by an aggressively hawkish European Central Bank (ECB). Despite the Eurozone facing stagflation risks, with Q1 GDP growth a meagre 0.1% q/q, inflation remains sticky, hitting 3.2% y/y, largely driven by energy shocks.
Consequently, the latest Reuters polling indicates the ECB is highly likely to hike its deposit rate to 2.25% next week, providing a solid floor for the single currency and countering the dollar’s strength.