Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
USD softens as risk sentiment wavers
US equity futures declined, with Nasdaq 100 futures down 1% and S&P 500 futures falling 0.7%. Higher US Treasury yields weighed on tech and growth stocks, while noise around Trump-Musk relations added further pressure.
The ECB delivered a 25bps rate cut to 2.00%, as expected, while revising inflation forecasts lower to 2% for 2025 and 1.6% for 2026.
President Lagarde hinted that the policy easing cycle may be nearing its conclusion, with a potential pause in July.
The USD softened slightly overnight as risk sentiment remained cautious following a lack of concrete developments in US-China trade talks.
USD/CNH pair remained relatively unchanged, reflecting market awareness of ongoing challenges in US-China relations.
EUR/USD pulled back from ~1.1500 to 1.1440 during the ECB press conference, but ended 0.25% gains overnight.
China’s Services PMI shows resilience, but CNH unchanged
China’s Caixin Services PMI edged higher to 51.1 in May, beating expectations of 51.0 and improving from 50.7 prior.
This suggests modest growth in the services sector, with both supply and demand improving slightly.
The Composite PMI slipped into contraction at 49.6, dragged down by manufacturing weakness.
USD/CNH was unchanged overnight, with next key resistance levels at 21-day EMA of 7.2013 and 50-day EMA of 7.2292.
Greenback nears three-year lows ahead of jobs data
The greenback, as measured by the USD index, neared three-year lows overnight ahead of tonight’s all-important US jobs data.
The May non-farm employment change is forecast to see 126k new jobs according to the Bloomberg consensus, with the unemployment rate forecast to stay steady at 4.2%.
The key risk is another strong number. The US job report has defied expectations for a weakening with the last two results actually stronger than expected.
With another strong number, the USD could stage a recovery from key support at the three-year lows on the USD index and push the greenback higher in other markets.
The US jobs report is due at 10.30pm AEST.
Aussie hovers above key level 0.65
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 2 – 6 June
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
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