The USD is higher to start the US session vs the EUR, JPY and GBP. The EURUSD has seen down and up price action, erasing most of the declines to start the US session. The GBPUSD is down by about -0.44% after the UK economy showed weaker-than-expected data for May. The GDP Estimate fell by -0.1%, missing expectations of +0.1%, though slightly better than April’s -0.3%. Additionally, UK Manufacturing Output plunged by -1.0%, far worse than the expected -0.1%, and below both the previous -0.9% and revised -0.7% figures. These disappointing results weighed on the pound and supported further downside in GBPUSD. The USDJPY is higher by 0.47% to start the day.
The video above outlines the key technical levels in play for the 3 major pairs – the EURUSD, USDJPY and GBPUSD – and explains the bias, the risks and targets for traders today.
The Trump tariff barrage continued with tariffs of 35% to the US closest neighbor Canada – separate from sectorial tariffs. The USDCAD moved spiked higher on the news., but has moved back around 50% from the high. Canadian Prime Minister Carney emphasized that throughout ongoing trade negotiations with the United States, the Canadian government has consistently defended the interests of its workers and businesses. He stated that Canada will maintain this commitment as it works toward the new August 1st deadline. Carney also highlighted that Canada remains dedicated to collaborating with the U.S. to protect lives and communities in both nations and is prepared to launch a series of significant new national projects.
Vietnam is surprise but the 20% tariff and 40% on transhipped good. They were pushing for 10-15% range.
The EU next? Trump said that the letter would be coming out today.
Federal Reserve Bank of Chicago President Austan Goolsbee, typically more dovish, struck a more cautious tone in recent remarks. He emphasized that the Fed’s mandate is focused on inflation and employment—not on cutting interest rates to ease government debt burdens. Goolsbee pushed back against calls for rate cuts, aligning himself with a “wait and see” approach. He noted that prior to the April 2 tariffs, economic data was strong, but since then, uncertainty has increased and must be resolved. He added there is little evidence so far that tariffs have boosted inflation, though businesses in the Midwest remain wary. He also mentioned the Fed’s facilities need renovation with enhanced security, dismissing any notion of luxury.
ECB Executive Board member Isabel Schnabel signaled a cautious stance on further easing, stating that the threshold for another rate cut is “very high.” She downplayed concerns over the euro’s strength impacting inflation and noted there is no risk of a sustained inflation undershoot. Schnabel described the eurozone economy as resilient, with balanced risks to the growth outlook, and said current policy is “in a good place.” Her comments reinforce expectations that the ECB will likely hold rates steady through the summer, with markets pricing in a 97% chance of no cut in July and only a 38% chance in September. The ECB has cut the main financing rate from 4.5% to the current 2.15% since June 2024.
Despite Schabel’s reluctance, ECBs Panetta has a different view. Panetta stated that if downside growth risks continue to support disinflation, the central bank should maintain its easing stance. He emphasized the need for policy to remain flexible and pragmatic in the coming months. Additionally, Panetta noted that Europe could benefit from a shift in global capital allocation—but only if it takes timely action.
US stocks are lower as it reacts negatively to the tariff news
- Dow -269 points
- S&P down -34 points
- Nasdaq down -105 points
in the US debt market, yields are higher:
- 2-year yield 3.889%, +2.1 basis points
- 5-year yield 3.960%, +2.9 basis points
- 10 year yield 4.387%, +4.1 basis points
- 30 year yield 4.914%, +1.2 basis points
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