Awaiting U.S. Labor Statistics, Trump’s Fiscal Package and ECB Minutes – Currency Thoughts
Awaiting U.S. Labor Statistics, Trump’s Fiscal Package and ECB Minutes
July 3, 2025
Financial markets are waiting and seeing ahead of today’s one-day early release of June U.S. labor market statistics. Considerable progress was made overnight toward a likely passage by the House of President Trump’s tax and spending bill, setting the stage for its signing into law tomorrow. Minutes from the last European Central Bank will also be published today.
A smaller rise of roughly 100k in U.S. non-farm payroll jobs are predicted, along with a marginally higher 4.3% unemployment rate and unchanged on-year wage growth of 3.9%. Weekly new jobless insurance claims are projected a tad higher than in the prior week. Labor market participation is seen dipping marginally, and preliminary information points to a probable wider goods and services trade deficit, whose release is also scheduled today.
Minutes from the European Central Bank policy review in early June, in which key interest rates were sliced an eighth time and by 25 basis points, observe subdued inflation, soft growth prospects, lower world energy prices, but also heightened uncertainties related to tariffs and geopolitical strains. Comments made at this week’s central banking forum sponsored by the ECB indicate that some of the bank’s policymakers favor a rate pause. As always, the minutes call for a data-dependent approach at future policy reviews.
Overnight net dollar movements against the euro, yen, loonie, Swissy, and sterling have been limited to plus or minus 0.1%.
Stock markets have also largely marked time, closing up 0.2% in China and 0.1% in Japan but down 0.2% in India and 0.1% in Indonesia. Share price changes in Europe and U.S. stock futures have likewise been minimal ahead of the U.S. data reports.
That’s not the case among 10-year sovereign debt yields, which show declines of nine basis points in the U.K., five bps in Italy, four bps in Germany, France and Spain, and two basis points in the United States. The Japanese JGB yield remained steady at 1.43%.
Bitcoin’s price climbed another 0.8% and , at $109.6k, is not far beneath the record high of $111.8k. The price of WTI oil is 0.4% firmer, while gold is flat.
Turkish consumer price inflation edged marginally downward to a 3-month low of 35.1% in June but was accompanied by an uptick in core CPI to 35.8% and a four-month high producer price inflation rate of 24.5%. CPI inflation had fallen from highs of 75.5% in May 2024 and 85.5% in October 2022, while PPI inflation got as lofty as 157.7% in October 2022.
Armenian consumer price inflation fell from a year and a half high of 4.3% in May to a 2-month low of 3.9% last month. In Georgia, the country, CPI inflation last month of 4.0% was its highest in 27 months.
Extremely low inflation was reported by Cyprus and Switzerland, by contrast. Cypriot CPI inflation was sub-zero at a 51-month low of -0.4% in June. Swiss CPI inflation last month was only 0.1% after readings of -0.1% in May and zero percent in April.
The bulk of today’s reported composite purchasing manager indices for June were at or above the 50 threshold between improving conditions and deteriorating ones. These included India (61.0), Australia (51.6), China (51.3), Ireland (52.8), Spain (52.1), Italy (51.1), Germany (50.4), Sweden (51.5), Euroland (50.6), Japan (51.5) and Great Britain (52.0). Two exceptions to this pattern were Russia (a 30-month low of 48.5) and France (a two-month low of 49.2).
Euroland’s service sector has experienced an historically lengthy span of contraction that seems to be ending, but it recovery will likely proceed at a subdued pace.
The June non-oil PMI scores of Saudi Arabia and the United Arab Emirates were a 3-month high of 57.2 and a 2-month high of 53.3, respectively. Lebanon’s PMI slid to a 2-month low of 49.2, while the Standard Bank South African index punched in at 50.1, a 2-month low.
The Canadian manufacturing PMI fell to a 2-month low of 45.6. Singapore’s manufacturing PMI of 50 was at a 3-month high.
U.S. nonfarm payroll jobs grew by a greater-than-projected 147k in June but only because of a surprise 73k increase in government jobs. Private sector workers increased only 74k, which was lower than forecast and included a 7k drop in factory employment. April-May jobs growth got revised 16k higher. However, the 130k per month increase of jobs during the first half of 2025 was 24% lower than the 171k per month advance during the second half of 2024. Average weekly hours worked fell to 34.2, a four month low, and labor force participation dipped 0.1 percentage point to a 30-month low of 62.3%.
U.S. wage growth decelerated further last month. Average hourly earnings went up 0.2% on month, less than the consensus forecast that anticipated a 0.3% increase. compared to a year earlier, wage growth slowed to an 11-month low of 3.7% from 3.9% in May and 4.2% last November. This deceleration was all the more surprising because of lower-than-forecast unemployment. The jobless rate slowed to a 4-month low of 4.1% after three straight 4.2% readings, and the U6 gauge of un- and underemployment also dipped 0.1 percentage point to 7.7%. The separate release of jobless insurance claims revealed a further 4k drop in new claims to a 6-week low of 233k, but the overall total of all claims stayed at 1.964 million, highest in over 3-1/2 years.
The widening of the U.S. goods and services trade deficit in May that had been foretold by the preliminary goods trade figures was confirmed. A deficit of $71.517 billion in May exceeded April’s $60.60.237 shortfall and yielded a $$522.4 year-to-date deficit that was 50.4% greater than the deficit during the first five months of 2024.
In response to the U.S. data, the dollar and U.S. share prices rose, and the 10-year Treasury yield flipped from a small overnight dip to showing a six-basis point net advance.
Canada also reported a trade deficit for the month of May. Such totaled C$ 5.859 billion, down from C$ 7.603 billion in April but 3.3 times wider than the C$ 1.777 billion deficit in May 2024. Comparing the latest month to a year earlier, exports advanced 3.2%, whereas imports fell by 3.2%.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: composite and service sector PMIs June 2025, ECB minutes, Swiss and Turkish CPI, U.S. labor market data and trade deficit
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