Markets Unshaken by Weak US Data, Await Guidance from ECB

Action Insight Daily 6-5-25

Markets Unshaken by Weak US Data, Await Guidance from ECB

The US markets remain remarkably steady overnight despite a string of soft US economic releases overnight. Disappointing job and services data failed to trigger any meaningful selloff in equities, while Dollar edged slightly lower. Market pricing for Fed policy remains broadly unchanged, with a 96% chance of a hold at the upcoming meeting and a 70% probability for no change in July. Still, Friday’s non-farm payrolls report looms as a potential catalyst for repricing should the labor market disappoint more sharply than expected.

On the trade front, tensions are simmering as the US formally doubled its tariffs on imported steel and aluminum. Canada is now openly preparing retaliatory measures should ongoing negotiations with Washington break down. Prime Minister Mark Carney told lawmakers that Canada is engaged in “intensive negotiations” but is also preparing reprisal tariffs in parallel.

Meanwhile, EU-US trade talks appear to be moving in a more constructive direction. After a meeting in Paris, EU negotiator Maros Sefcovic and US Trade Representative Jamieson Greer described the discussions as productive and advancing “at pace.” Sefcovic noted the talks are now “very concrete,” and Greer echoed that sentiment, signaling genuine willingness from both sides to achieve a reciprocal agreement.

Attention now turns to ECB’s policy decision later today. A 25 bps rate cut is fully priced in, with the real focus on whether President Lagarde signals a pause for July. Given the subdued market response to recent central bank events and the current range-bound conditions, it remains to be seen whether today’s meeting will break the stalemate......

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USD/CAD Daily Outlook

Daily Pivots: (S1) 1.3645; (P) 1.3688; (R1) 1.3724; More...

USD/CAD's decline from 1.4791 is still in progress and intraday bias stays on the downside. Next target is 61.8% projection of 1.4414 to 1.3749 from 1.4014 at 1.3603. Firm break there will pave the way to 100% projection at 1.3349. On the upside, outlook will stay bearish as long as 1.3860 resistance holds, in case of recovery.

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EURUSD | USDJPY | GBPUSD | USDCHF | AUDUSD | USDCAD

EURJPY | EURGBP | EURCHF | EURAUD | GBPJPY

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Economic Calendar
GMT Ccy Events Actual Forecast Previous Revised
23:30 JPY Labor Cash Earnings Y/Y Apr 2.30% 2.60% 2.30%
01:30 AUD Trade Balance (AUD) Apr 5.41B 6.05B 6.90B 6.89B
01:45 CNY Caixin Services PMI May 51.1 51.1 50.7
05:45 CHF Unemployment Rate May 2.80% 2.80%
06:00 EUR Germany Factory Orders M/M Apr -1.10% 3.60%
08:30 GBP Construction PMI May 47.2 46.6
11:30 USD Challenger Job Cuts Y/Y May 62.70%
12:15 EUR ECB Deposit Rate 2.00% 2.25%
12:30 CAD Trade Balance (CAD) Apr 0.2B -0.5B
12:30 USD Initial Jobless Claims (May 30) 235K 240K
12:30 USD Trade Balance (USD) Apr -117.2B -140.5B
12:30 USD Nonfarm Productivity Q1 -0.80% -0.80%
12:30 USD Unit Labor Costs Q1 5.70% 5.70%
12:45 EUR ECB Press Conference
14:00 CAD Ivey PMI May 48.3 47.9
14:30 USD Natural Gas Storage 111B 101B