Daily Currency Update

USD - US Dollar

The USD is ending the week defensively, trading mostly lower against major currencies. Global stocks and US equity futures are weaker, with major bond markets also down, particularly core European government debt. Crude is nearly flat, while industrial and precious metals are softer. Gold fell after the PBoC ceased purchases in May following an 18-month buying spree. Economists expect May's Non-Farm Payroll data at 185k, while the Bloomberg "whisper" number is +167k, suggesting potential disappointment. Recent labor market data has softened, and US economic reports for April and May have trended below expectations. An on-consensus outcome would slightly exceed last month's 175k gain but remain below the 200k level, indicating modest slowing in the US labor market. Soft data will add pressure on the USD, tilting short/medium-term risks to the downside.

CAD - Canadian Dollar

The CAD has edged marginally lower overnight, in line with its G10 commodity peers due to softening risk appetite. Despite being down for the week, the CAD shows some resilience, trading close to pre-dovish BoC cut levels. Canada's labor market survey is expected to show a 22.5k job gain, down from April's 90.4k rise. The unemployment rate is expected to increase to 6.2% from 6.1%, the highest since early 2022, indicating a loosening labor market. Wage growth has been slowing, with May data expected to show a minor deceleration to 4.7%. The CAD is unlikely to gain much from firm data, as the BoC has already set its rate course. However, soft data may not significantly weaken the CAD either, with US data being more influential for the CAD today. Observe the USD/CAD trend.  

EUR - Euro

The EUR remains firm following the hawkish ECB rate cut. ECB policymakers have suggested uncertainty about future rate reductions. This caution may stem from Eurozone Q1 compensation data rising 5.1%, up from 4.9% in Q4, indicating concerns over high wages driving inflation. Clear progress on slowing wages might be needed before more easing in September. Support EUR/USD holding around 1.09.

GBP - British Pound

Sterling is little changed, with no major UK data reports overnight. Election news remains poor for the Conservatives, as PM Sunak faced criticism for leaving D-Day commemorations early for a TV interview. Despite this, Cable retains a small weekly gain, unbothered by the prospect of a large Labour win.