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Labour Market Powers Dollar Surge
Robust U.S. jobs data for May 2025, with 139,000 jobs added, underscores economic strength despite tariff headwinds. Healthcare and leisure sectors drove gains, adding 62,000 and 48,000 jobs, respectively, while manufacturing shed 8,000, hinting at trade pressures. The unemployment rate held at 4.2%, among the lowest since 1948, and wage growth outpaced inflation, bolstering consumer spending.
Treasury Secretary Scott Bessent’s push for fiscal discipline highlights the stakes. However, downward revisions to prior months and a dip in labour-force participation signal a cooling trend, raising questions about sustainability amid global uncertainties.
Euro Stumbles Despite Strong Fundamentals
The EUR/USD pair slid to 1.1386, down 0.51%, after hitting a six-week high near 1.1500. Despite eurozone GDP rising to 1.5% annually and retail sales advancing in April, the euro failed to capitalize. The European Central Bank, led by President Christine Lagarde, cut rates to 2% as inflation fell to 1.9%, but signaled a pause in easing, with ECB’s Robert Holzmann advocating for steady rates. Markets doubt further cuts beyond September, reflecting the ECB’s cautious stance. The dollar’s rally, fueled by a 9.5-basis-point jump in 10-year Treasury yields to 4.484%, overwhelmed eurozone optimism, exposing vulnerabilities in the euro’s global push.
Gold Wavers but Holds Ground
Gold (XAU/USD) fell to $3,322, down 0.84%, after the strong U.S. jobs report dampened Federal Reserve rate cut expectations. Despite the drop, gold retains a weekly gain of over 1.3%, supported by geopolitical tensions, including Russia-Ukraine and Israel-Hamas conflicts. Central banks’ projected purchase of 1,000 metric tonnes of gold in 2025, shifting from dollar assets, bolsters its appeal. Rising U.S. real yields at 2.196% pose headwinds, but gold’s bullish trend persists above $3,300, with potential to test $3,403 or higher if geopolitical risks intensify.
Oil Soars
Oil prices continue to rise in June 2025, with West Texas Intermediate crude climbing 1.91% to close at $64.58 per barrel and Brent crude surging over 2% to settle at $66.23 per barrel, as geopolitical tensions drive prices higher, while OPEC production cuts loom. These developments fuel inflation concerns, potentially complicating Jerome Powell’s Federal Reserve decisions on interest rates. Upcoming U.S. oil inventory reports spark possible volatility, naturally requiring a balance between economic growth and price stability.
Next Week’s Critical Catalysts
The week of June 9, 2025, holds pivotal events. The U.S. economic docket features Consumer Price Index (CPI) and Producer Price Index (PPI) data, critical for gauging inflation trends ahead of FOMC’s June 17–18 meeting, where Chair Jerome Powell’s remarks will signal rate cut prospects.
With markets pricing in fewer than two cuts by year-end, any inflationary surprise could further lift yields and the dollar. The University of Michigan Consumer Sentiment report will offer insights into consumer confidence amid trade and fiscal debates. In the eurozone, the ECB’s Survey of Monetary Analysis and Industrial Production data will test the euro’s resilience. Ongoing trade talks, with a July 9 tariff deadline looming, could sway markets if negotiations falter.
Investors, under such circumstances, tend to balance equities’ earnings-driven strength with bonds’ stability, staying agile as policy and geopolitical risks converge.
