Markets Brace for Pivotal ECB Decision and US Jobs Data.
Global currency markets are poised for a significant week, with a highly anticipated interest rate decision from the European Central Bank and the crucial US Non-Farm Payrolls report set to dominate headlines. Following last week's key inflation data from the US and Eurozone, which offered further insights into the disinflationary path, investors will be intensely focused on these top-tier events for fresh direction. Final Purchasing Managers' Index (PMI) readings for May, due early in the week, will also provide an updated snapshot of economic health across major economies.
The Pound Sterling will likely be sensitive to this week's global risk sentiment, heavily influenced by the major events unfolding in the Eurozone and the US. Domestically, the final PMI readings for the UK's manufacturing and services sectors will be watched for indications of economic momentum. With no major Bank of England pronouncements scheduled, Sterling's trajectory may also be shaped by shifts in expectations regarding the policy paths of other key central banks.
The US Dollar is set for a data-heavy week, culminating in Friday's employment report. After last week's Core PCE inflation figures provided the latest piece of the puzzle for the Federal Reserve, the upcoming Non-Farm Payrolls will offer critical insights into the health of the US labour market and could significantly sway expectations for future Fed policy. Earlier in the week, job openings data and final PMI surveys will also draw attention as markets continue to assess the US economic landscape.
The Euro is firmly in the spotlight, with the European Central Bank's monetary policy meeting on Thursday being the week's centrepiece. A high probability of an initial interest rate cut has been priced in by market participants; therefore, the ECB's accompanying statement and press conference will be meticulously analysed for guidance on the potential pace and scale of future easing. Final PMI figures and German unemployment data will provide an earlier health check for the Eurozone economy.
Events to Watch This Week:
Monday, June 2: Global Final Manufacturing PMIs (May) (UK, Eurozone, US)
Tuesday, June 3: German Unemployment Rate (May), US JOLTS Job Openings (April)
Wednesday, June 4: Global Final Services & Composite PMIs (May) (UK, Eurozone, US), US ADP Non-Farm Employment Change (May)
Thursday, June 5: European Central Bank (ECB) Interest Rate Decision & Press Conference
Friday, June 6: US Non-Farm Payrolls Report (May)
This week promises to be a potentially defining period for currency markets. The combination of a landmark ECB decision and critical US employment figures has the capacity to set the trading tone for the month of June.
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