From Marc to Market:
The dollar is trading lower against all of the G10 currencies ahead of the US employment report. The softer ADP private sector estimate seems to have encouraged some paring of long dollar positions ahead of tomorrow’s US holiday. The yen is the strongest, up nearly 0.75% against the greenback. This does not appear to be a result of intervention. Instead, it likely reflects the nervous and extended positioning. The dollar fell to JPY160.90 in early European turnover and is now near JPY161.40. The US formally refused to renew the USMCA. This opens the process to annual reviews for the next decade unless a party withdraws. The immediate market impact appeared minimal.
The focus is on the US employment report. After a poor 2025, when the US created an average of 10k jobs a month, there has been recovery this year. Through May, US has created about 114k jobs a month this year. Fed Chair Warsh, who eschews forward guidance, said at the ECB’s Sintra gathering that inflation expectations have eased in recent weeks. The University of Michigan’s consumer inflation expectations for 5-10 years did slip from the preliminary June estimate, and of course, oil and gasoline prices have fallen. Still, coming into today’s jobs report, the Fed funds futures are discounting almost 35 bp of tightening this year....
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