Investors are focused on May labor market data, which could significantly influence the Federal Reserve’s decisions as early as the next meeting. The May nonfarm employment report from Automatic Data Processing, based on a survey of around 400.0K business sources, came in positive: the figure rose from 105.0K to 122.0K, exceeding the forecast of 118.0K and confirming the sector’s resilience under current crisis conditions. If the federal data, due today at 14:30 (GMT+2), is similarly strong, with employment rising by 85.0K and unemployment holding around 4.3%, tighter monetary conditions from the U.S. Federal Reserve will become a highly likely scenario in the medium term. Otherwise, current monetary parameters will probably be maintained. For now, board members continue to send hawkish signals to the market: the day before, Kansas City Federal Reserve President Jeffrey Schmid said that monetary authorities now face a difficult choice — either show patience and keep interest rates unchanged or raise them to curb inflation, which has remained above the 2.0% target for many years.
Eurozone
The euro is strengthening against the yen and the U.S. dollar but weakening against the pound. Today, eurozone gross domestic product data for the first quarter was published and came in weak: quarter-on-quarter, the indicator corrected by –0.2% against expectations of 0.1% growth, while year-on-year growth slowed from 1.2% to 0.3%, more sharply than experts had expected at 0.8%. It is also worth noting the revision of forecasts for the Italian economy by the national statistics institute ISTAT, whose experts now expect GDP to reach 0.7% this year instead of the previously forecast 0.8%, remaining under significant pressure from the energy crisis and U.S. trade tariffs. Nevertheless, the slowdown in the eurozone as a whole is unlikely to become a key argument for European Central Bank officials to maintain a wait-and-see approach to monetary policy adjustments, as they view high inflation, which reached 3.2% in April, as the main issue.
United Kingdom
The pound is strengthening against its main competitors — the euro, the U.S. dollar, and the yen. Today, the May house price index from Halifax Bank plc, one of the country’s largest mortgage lenders, was published. The index is calculated based on mortgage loan data covering around 15.0K monthly residential property purchases. It showed a decline for the second month in a row, falling by 0.1%, while year-on-year it rose by 0.5%, still missing the forecast of 1.0%. The statistics point to cooling in the sector, as higher borrowing rates and uncertainty caused by the Middle East conflict prevent residents from making large purchases. Also worth noting is the Bank of England’s May survey of inflation expectations among British businesses: over the next 12 months, management expects consumer prices to accelerate by 4.0%, rather than the previously recorded 4.4%.
Japan
The yen is strengthening against the U.S. dollar but weakening against the pound and the euro.
Market participants and forex traders are focused on April household spending data: month-on-month, spending rose by 1.6%, exceeding analysts’ expectations of 0.8%, while year-on-year it declined by 0.5%, but not as sharply as forecast at –1.5%, as residents continue to make purchases, including large ones, which nevertheless stimulates inflationary growth. Also worth noting is a new warning from Japanese Finance Minister Satsuki Katayama, who said today that the government is ready to respond to exchange rate movements at any time and reserves the right to take “decisive measures” against excessive price volatility. Recall that last month the government allocated 11.7 trillion yen for currency interventions, but their effect proved short-lived.
Australia
The Australian dollar is losing ground against the euro and the pound but showing mixed dynamics against the yen and the U.S. dollar. In the absence of significant economic releases, price movement is driven by external factors. It is only worth noting the publication of a Reuters survey of real estate market analysts, according to which house prices in Australia are expected to show the weakest growth since 2022, as higher mortgage rates and peak inflation keep buyers out of the market. This would mean a sharp slowdown from 2025, resulting from tighter monetary conditions by the Reserve Bank of Australia and a 75-basis-point increase in borrowing costs.
Oil
Oil prices are showing mixed dynamics today and trading within narrow sideways ranges.
Investors prefer not to open new trading positions ahead of the publication of May employment and unemployment data today at 14:30 (GMT+2). Confirmation of stability in the sector would allow Federal Reserve officials to continue tightening monetary policy and would lead to a strengthening of the U.S. dollar against alternative assets, including commodities. Market participants are also monitoring developments in the Middle East, as U.S. President Donald Trump has signaled the possibility of a diplomatic breakthrough in peace talks with Iran as early as the coming weekend, although most market participants remain highly skeptical about a positive outcome of bilateral consultations. It is also worth noting that today an auction will be held for licenses to develop oil and gas fields across an area of 278.828K hectares in the Arctic National Wildlife Refuge in Alaska, which could partially reduce the global energy deficit in the future.
