The US dollar is advancing against the euro, yen, and pound, supported by positive labor market data. JOLTS job openings surged by 374,000 in May, reaching 7.769 million—primarily driven by gains in tourism and hospitality, which contributed 314,000 positions. However, June employment data from Automatic Data Processing (ADP) showed a surprise decline of 33,000 nonfarm jobs, marking the first drop since January 2022 and underperforming the expected increase of 9,090 jobs.

This cooling in the labor sector complicates the Federal Reserve’s next moves, especially as inflation remains elevated at 2.4% in May. Fed officials now face a dilemma between fighting inflation and supporting economic recovery. During the recent ECB Forum, Fed Chair Jerome Powell reiterated a cautious stance, indicating that interest rates could have been lowered if not for the White House’s aggressive tariff policy. Going forward, US monetary policy is set to be guided by incoming macroeconomic data.

Forex Eurozone: Euro Steady, ECB Signals End of Tightening Cycle

The euro is firm against the pound, weaker versus the dollar, and mixed against the yen. June’s manufacturing PMI edged up from 49.4 to 49.5, signaling stabilization in the sector and a possible case for more accommodative monetary policy from the European Central Bank (ECB). Yet, policymakers remain divided: some argue inflation targets have been met, while others fear a sharper slowdown below the 2.0% threshold. Belgium’s central bank governor Pierre Wunsch suggested that euro strength against the dollar—now near the 1.1800 mark, a high not seen since late 2021—strengthens the case for a dovish approach, as an appreciating euro could pressure the region’s recovery.

United Kingdom: Pound Weakens on Political Uncertainty

Sterling is losing ground versus the euro, yen, and dollar. The downtrend follows deepening divisions within the Labour Party: party leaders, under pressure from opposition MPs, scrapped a proposed £5 billion cut to disability benefits, raising prospects of autumn tax hikes. Prime Minister Keir Starmer dodged questions on whether Chancellor Rachel Reeves will serve out her term, fueling investor concerns about possible government reshuffles. Meanwhile, BoE board member Alan Taylor warned the “soft landing” for the UK economy is at risk, and floated the possibility of up to five rate cuts before year-end to support recovery.

Japan: Yen Mixed as BOJ Maintains Wait-and-See Stance

The yen is up versus the pound, weaker against the dollar, and trading sideways against the euro. Investors focused on comments from BOJ Governor Kazuo Ueda at the ECB Forum, where he noted headline inflation has exceeded the 2% target for over three years—mainly due to food prices—while core inflation remains below target. Ueda forecast inflation could sustainably reach target levels by the end of his term in 2028, but emphasized that balance sheet normalization would likely fall to his successor. Meanwhile, President Donald Trump signaled he does not plan to extend trade talks with Japan, expressing doubts about reaching a deal before the July 9 deadline.

Australia: Aussie Dollar Under Pressure Amid Tepid Retail and Housing Data

The Australian dollar is slipping against the euro and greenback, gaining versus the pound, and trading mixed against the yen. May retail sales rose just 0.2% (versus an expected 0.3%) as food consumption slowed. Analysts expect overall consumption to continue falling, potentially forcing the Reserve Bank of Australia (RBA) into a series of rate cuts to support recovery. Building permits climbed 3.2%—missing the 4.2% forecast—while permits for private houses slowed from 5.9% to 0.5%.

Commodities: Oil Loses Early Gains

Oil prices opened higher but turned lower mid-session. Initial support came from Iran’s decision to halt cooperation with the International Atomic Energy Agency (IAEA), raising concerns over increased uranium enrichment and regional tensions. Focus then shifted to weak US labor data, highlighting a slowdown in the world’s leading economy and raising fears of lower energy demand. The latest American Petroleum Institute (API) report showed a 0.68 million barrel build in US inventories. At 16:30 (GMT+2), the EIA will release corresponding data, with forecasts calling for a drawdown of –3.5 million barrels, which could provide near-term support for crude.