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IC Markets Asia Fundamental Forecast | 5 June 2025

What happened in the U.S. session?

Private businesses in the U.S. added just 37,000 workers to their payrolls in May. Not only were these figures the lowest since March 2023, but they also missed forecasts of 115,000 by a wide margin. In addition, April’s figures were revised lower by 60,000. Sectors such as leisure and hospitality, financial activities, and information saw modest gains while professional and business services, education and health registered the largest job losses. In short, this was a pretty abysmal jobs report that raises rate cut expectations by the Federal Reserve.

Moving up north, the Bank of Canada (BoC) kept its overnight rate steady at 2.75% for the second successive board meeting, as widely expected. The Governing Council observed that the ongoing fluctuations in U.S. tariffs, along with the unpredictable results of bilateral trade talks and tariff rates that remain significantly higher than at the start of 2025, have created downside risks to economic growth and pushed up inflation expectations. The heightened uncertainty is largely due to the lack of a clear U.S. tariff policy and ongoing threats of new trade measures. As a result, the Governing Council emphasised risks such as the potential impact of higher U.S. tariffs on demand for Canadian exports. The Loonie strengthened overnight, causing USD/CAD to fall under 1.3700 overnight.

What does it mean for the Asia Session?

Australia’s trade surplus in goods narrowed to A$5.4 billion in April, down from a marginally revised A$6.9 billion in the previous month, missing market expectations of A$5.9 billion, as exports fell while imports rose. Exports dropped 2.4% from the previous month to A$44.1 billion, reversing a downwardly revised 7.2% increase in March as shipments to the U.S. were dampened by Trump’s tariffs. Meanwhile, imports grew by 1.1% to A$38.7 billion, rebounding from an upwardly revised 2.4% decline in the previous month. Despite a narrowing trade surplus, demand for the Aussie remains robust due to broad weakness in the greenback.

Moving over to Australia’s largest trading partner, the Caixin Services PMI rose from 50.7 in the prior month to 51.1 in May, up from a seven-month low while coming in line with market forecasts. The latest reading signalled a stronger expansion in the services sector, supported by faster growth in new business and activity, despite a renewed decline in new export orders. New export orders fell for the first time in 2025, dampened by Trump’s tariffs. Employment increased for the first time in three months, with the rate growth being the fastest since last November. Steady growth for the services sector could provide near-term support for crude oil prices.

The Dollar Index (DXY)

Key news events today

Unemployment Claims (12:30 pm GMT)

What can we expect from DXY today?

Unemployment claims unexpectedly jumped from 226,000 in the previous week to 240,000 in the period ending 24th of May, exceeding market forecasts of 230,000. This result suggests that the U.S. labour market may have started to soften amidst the heightened economic uncertainty due to trade tariff escalation, while increasing continuing claims underscore the slowing hiring pace for firms. The latest estimate shows claims remaining somewhat elevated, with an expected reading of 236,000. Should claims continue to trend higher, it raises concerns surrounding the strength of the labour market while potentially intensifying the overhead pressures for the dollar.

Central Bank Notes:

• The Board of Governors of the Federal Reserve System voted unanimously to maintain the Federal Funds Rate in a target range of 4.25 to 4.50% on 7 May 2025.
• The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run, but uncertainty around the economic outlook has increased further.
• The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen.
• Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace while the unemployment rate has stabilised at a low level in recent months, and labour market conditions remain solid. However, inflation remains somewhat elevated.
• GDP growth forecasts were revised downward for 2025 (1.7% vs. 2.1% in the December projection) while PCE inflation projections have been adjusted slightly higher for 2025, with core inflation expected to reach 2.5%, partly due to tariff-related pressures.
• In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook and would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of its goals.
• Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25B to $5B while maintaining the monthly redemption cap on agency debt and agency mortgage-backed securities at $35B.
• The next meeting is scheduled for 17 to 18 June 2025.

Next 24 Hours Bias

Medium Bearish

Gold (XAU)

Key news events today

Unemployment Claims (12:30 pm GMT)

What can we expect from Gold today?

Unemployment claims unexpectedly jumped from 226,000 in the previous week to 240,000 in the period ending 24th of May, exceeding market forecasts of 230,000. This result suggests that the U.S. labour market may have started to soften amidst the heightened economic uncertainty due to trade tariff escalation, while increasing continuing claims underscore the slowing hiring pace for firms. The latest estimate shows claims remaining somewhat elevated, with an expected reading of 236,000. Should claims continue to trend higher, it raises concerns surrounding the strength of the labour market while potentially intensifying the overhead pressures for the dollar – a result that should function as a bullish catalyst for gold.

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

Trade Balance (1:30 am GMT)

What can we expect from AUD today?

Australia’s trade surplus in goods narrowed to A$5.4 billion in April, down from a marginally revised A$6.9 billion in the previous month, missing market expectations of A$5.9 billion, as exports fell while imports rose. Exports dropped 2.4% from the previous month to A$44.1 billion, reversing a downwardly revised 7.2% increase in March as shipments to the U.S. were dampened by Trump’s tariffs. Meanwhile, imports grew by 1.1% to A$38.7 billion, rebounding from an upwardly revised 2.4% decline in the previous month. Despite a narrowing trade surplus, demand for the Aussie remains robust due to broad weakness in the greenback.

Central Bank Notes:

• The RBA reduced its cash rate by 25 basis points (bps), bringing it down to 3.85% on 20 May, following a pause on 1 April.
• Inflation has fallen substantially since the peak in 2022, as higher interest rates have been working to bring aggregate demand and supply closer towards balance.
• Data on inflation for the March quarter provided further evidence that inflation continues to ease. At 2.9%, annual trimmed mean inflation was below 3% for the first time since 2021 and headline inflation, at 2.4%, remained within the target band of 2 to 3%.
• While recent tariff announcements have resulted in a rebound in financial market prices, there is still considerable uncertainty about the final scope of the tariffs and policy responses in other countries, contributing to a weaker outlook for growth, employment and inflation in Australia.
• Private domestic demand appears to have been recovering, real household incomes have picked up and there has been an easing in some measures of financial stress. However, businesses in some sectors continue to report that weakness in demand makes it difficult to pass on cost increases to final prices.
• At the same time, a range of indicators suggests that labour market conditions remain tight. Employment is continuing to grow, measures of labour underutilisation are at relatively low rates and business surveys and liaison suggest that availability of labour is still a constraint for a range of employers.
• Looking through quarterly volatility, wage growth has softened over the past year or so but productivity growth has not picked up and growth in unit labour costs remains high.
• There are uncertainties about the outlook for domestic economic activity and inflation stemming from both domestic and international developments. While the central projection is for growth in household consumption to continue to increase as real incomes rise, recent data suggest that the pick-up will be a little slower than was expected three months ago.
• There is a risk that any pick-up in consumption is even slower than this, resulting in continued subdued growth in aggregate demand and a sharper deterioration in the labour market than currently expected.
• With inflation expected to remain around target, the Board therefore judged that an easing in monetary policy at this meeting was appropriate, assessing that this move would make monetary policy somewhat less restrictive.
• The Board will be attentive to the data and the evolving assessment of risks to guide its decisions. In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market.
• The Board is focused on its mandate to deliver price stability and full employment and will do what it considers necessary to achieve that outcome.
• The next meeting is on 8 July 2025.

Next 24 Hours Bias

Medium Bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

The abysmal ADP employment report triggered a sharp sell-off in the greenback to provide a strong boost for the Kiwi as it rose 0.7% on Wednesday. Strong tailwinds remain in place as this currency pair extended the upward momentum on Thursday, climbing towards 0.6050 as Asian markets came online.

Central Bank Notes:

• The Monetary Policy Committee (MPC) agreed to reduce the Official Cash Rate (OCR) by 25 basis points bringing it down to 3.25% on 28 May, marking the sixth consecutive rate cut.
• The Committee stated that annual consumer price index inflation increased to 2.5% in the first quarter of 2025 while inflation expectations across firms and households have also risen.
• However, core inflation is declining and there is spare productive capacity in the economy; these conditions are consistent with inflation returning to the mid-point of the 1 to 3% target band over the medium term.
• The New Zealand economy is recovering after a period of contraction as high commodity prices and lower interest rates are supporting overall economic activity but recent developments in the international economy are expected to reduce global economic growth.
• Both tariffs and increased policy uncertainty overseas are expected to moderate New Zealand’s economic recovery and reduce medium-term inflation pressures. However, there remains considerable uncertainty around these judgements.
• Labour market conditions remain weak while the unemployment rate is expected to peak this quarter at 5.2%.
• Inflation is within the target band, and the Committee is well placed to respond to domestic and international developments to maintain price stability over the medium term.
• The next meeting is on 9 July 2025.

Next 24 Hours Bias

Medium Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

The ongoing global trade uncertainty provides fuel for safe-haven assets such as the yen, with USD/JPY tumbling 1% on Wednesday. This currency pair fell as low as 142.60 overnight before stabilising around 143 at the beginning of Thursday’s Asia session.

Central Bank Notes:

• The Policy Board of the Bank of Japan decided on 1 May, by a unanimous vote, to set the following guidelines for money market operations for the inter-meeting period:
  1. The Bank will encourage the uncollateralized overnight call rate to remain at around 0.5%.
  2. The Bank will continue its plan to reduce the amount of its monthly outright purchases of JGBs, aiming to reach about 3 trillion yen by January-March 2026.
• Japan’s economic growth is likely to moderate, as trade and other policies in each jurisdiction lead to a slowdown in overseas economies and to a decline in domestic corporate profits and other factors, although factors such as accommodative financial conditions are expected to provide support. Thereafter, Japan’s economic growth rate is likely to rise, with overseas economies returning to a moderate growth path.
• The year-on-year rate of increase in the consumer price index (CPI, all items less fresh food) is likely to be in the range of 2.0-2.5% for fiscal 2025, in the range of 1.5-2.0% for fiscal 2026, and at around 2% for fiscal 2027. The effects of the past rise in import prices and of the recent rise in food prices such as rice prices – these factors have pushed up the inflation rate so far – are expected to wane.
• Meanwhile, underlying CPI inflation is likely to be sluggish, mainly due to the deceleration in the economy. Thereafter, however, underlying CPI inflation is expected to increase gradually.
• Regarding the employment and income situation, despite the deceleration in the economy, labour market conditions are likely to remain tight, as it will become more difficult for labour supply of women and seniors to increase.
• Comparing the projections through fiscal 2026 with those presented in the previous Outlook for Economic Activity and Prices (Outlook Report), the projected real GDP growth rate for fiscal 2024 is somewhat higher, but the projected growth rates for fiscal 2025 and 2026 are lower due to the effects of trade and other policies in each jurisdiction.
• There are various risks to the outlook. In particular, it is extremely uncertain how trade and other policies in each jurisdiction will evolve and how overseas economic activity and prices will react to them. It is therefore necessary to pay due attention to the impact of these developments on financial and foreign exchange markets and on Japan’s economic activity and prices.
• With regard to the risk balance, risks to economic activity are skewed to the downside for fiscal 2025 and 2026. Risks to prices are also skewed to the downside for fiscal 2025 and 2026.
• The next meeting is scheduled for 17 June 2025.

Next 24 Hours Bias

Medium Bearish

The Euro (EUR)

Key news events today

ECB Interest Rate Decision (12:15 pm GMT)

ECB Press Conference (12:45 pm GMT)

What can we expect from EUR today?

The European Central Bank (ECB) is widely expected to move ahead with a seventh consecutive rate cut, making another 25 basis point (bps) reduction in the three key interest rates – this would bring the main refinancing rate down to 2.15%. ECB President Christine Lagarde’s press conference commences half an hour after the monetary policy statement is released; this event will be closely scrutinised, especially given the current environment of tariff escalation and uncertainty between the U.S. and its major trading partners, including the European Union. Despite a potential rate cut, demand for the Euro could remain robust as investors appear to have lost confidence in the U.S. dollar.

Central Bank Notes:

• The Governing Council reduced the three key ECB interest rates by 25 basis points on 17 April to mark the sixth successive rate cut.
• Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be decreased to 2.40%, 2.65% and 2.25% respectively.
• The disinflation process is well on track with both headline and core inflation declining in March while services inflation has also eased markedly over recent months. Most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2% medium-term target on a sustained basis.
• Wage growth is moderating, and profits are partially buffering the impact of still elevated wage growth on inflation. The euro area economy has been building up some resilience against global shocks, but the outlook for growth has deteriorated owing to rising trade tensions.
• Increased uncertainty is likely to reduce confidence among households and firms, and the adverse and volatile market response to the trade tensions is likely to have a tightening impact on financing conditions. These factors may further weigh on the economic outlook for the euro area.
• The asset purchase programme (APP) and pandemic emergency purchase programme (PEPP) portfolios are declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.
• The Governing Council is determined to ensure that inflation stabilises sustainably at its 2% medium-term target. Especially in current conditions of exceptional uncertainty, it will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance.
• In particular, the Council’s interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission.
• The next meeting is on 5 June 2025.

Next 24 Hours Bias

Medium Bullish

The Swiss Franc (CHF)

Key news events today

No major news events.

What can we expect from CHF today?

Demand for the Swiss franc continues to remain robust due to ongoing global trade uncertainty, causing USD/CHF to fall 0.8% on Wednesday. This currency pair fell as low as 0.8186 overnight before stabilising around 0.8200 as Asian markets came online on Thursday.

Central Bank Notes:

• The SNB eased monetary policy by lowering its key policy rate by 25 basis points, from 0.50% to 0.25% on 20 March 2025, marking the fifth consecutive reduction.
• Underlying inflationary pressure has decreased further this quarter.
• Inflation in the period since the last monetary policy assessment has again been lower than expected, decreasing from 0.7% in November to 0.3% in February, primarily due to lower electricity prices.
• In the shorter term, the new conditional inflation forecast is slightly higher than December: 0.3% for Q2 2025, 0.4% for 2025 overall, and 0.8% for 2026 and 2027, based on the assumption that the SNB policy rate remains at 0.25% over the entire forecast horizon.
• GDP growth in Switzerland remains moderate, with the services sector continuing to show slightly stronger growth, while manufacturing faces challenges.
• The SNB anticipates GDP growth of around 1.0% to 1.5% for 2025.
• The SNB will continue to monitor the situation closely and will adjust its monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term.
• The next meeting is on 19 June 2025.

Next 24 Hours Bias

Weak Bearish

The Pound (GBP)

Key news events today

S&P Global Construction PMI (8:30 am GMT)

What can we expect from GBP today?

Construction activity in the U.K. fell into contraction at the beginning of this year and output continued to deteriorate till April. Although the construction PMI reading edged higher to 46.4, it signalled a fourth straight month of contraction as business uncertainty delayed new projects and caused further drops in new orders and staffing levels in April. May’s estimate of 47.4 points to another month of slight improvement in the PMI reading but it would still mark further deterioration for this sector. Despite a weakening construction sector, demand for the pound is likely to remain robust due to the broad weakness in the U.S. dollar.

Central Bank Notes:

• The Bank of England’s Monetary Policy Committee (MPC) voted by a majority of 5 to 4 to reduce the Bank Rate by 25 basis points (bps), bringing it down to 4.25% on 8 May 2025.
• Two members preferred a larger cut of 50 bps, while two opted to hold rates steady at 4.5%.
• The MPC also voted unanimously to reduce the stock of UK government bond purchases held for monetary policy purposes and financed by the issuance of central bank reserves, by £100B over the next 12 months to a total of £558B, starting in October 2024. On 18 December 2024, the stock of UK government bonds held for monetary policy purposes was £655B.
• Progress on disinflation in domestic price and wage pressures is generally continuing. Twelve-month CPI inflation fell to 2.6% in March from 2.8% in February, close to expectations in the February Report.
• Although indicators of pay growth remain elevated, a significant slowing is still expected over the rest of the year.
• Wholesale energy prices have fallen back since the February Report. Previous increases in energy prices are still likely to drive up CPI inflation from April onwards, to 3.5% for 2025 Q3, but is expected to fall back thereafter.
• Underlying UK GDP growth is judged to have slowed since the middle of 2024 and has been much less volatile than growth in headline GDP – growth was expected to have been around zero in 2025 Q1, well below Bank staff’s projection for headline growth of 0.6%.
• Underlying employment growth has also softened recently and the labour market has continued to loosen. The ratio of vacancies to unemployment has fallen further and is now judged to be below its equilibrium level – the impact of higher Employers’ National Insurance Contributions (NICs) on employment appears to have been fairly small to date.
• Based on the Committee’s evolving view of the medium-term outlook for inflation, a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate and it will continue to monitor closely the risks of inflation persistence and what the evolving evidence may reveal about the balance between aggregate supply and demand in the economy.
• Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further and the Committee will decide the appropriate degree of monetary policy restrictiveness at each meeting.
• The next meeting is on 19 June 2025.

Next 24 Hours Bias

Medium Bullish

The Canadian Dollar (CAD)

Key news events today

Ivey PMI (2:00 pm GMT)

What can we expect from CAD today?

As widely expected, the Bank of Canada (BoC) kept its overnight rate steady at 2.75% for the second successive board meeting. The Governing Council observed that the ongoing fluctuations in U.S. tariffs, along with the unpredictable results of bilateral trade talks and tariff rates that remain significantly higher than at the start of 2025, have created downside risks to economic growth and pushed up inflation expectations. The heightened uncertainty is largely due to the lack of a clear U.S. tariff policy and ongoing threats of new trade measures. As a result, the Governing Council emphasised risks such as the potential impact of higher U.S. tariffs on demand for Canadian exports.

Later today, the Ivey PMI is anticipated to register a second successive month of contraction for domestic economic activity due to the ongoing tariff uncertainty with its neighbour to the south. Despite PMI activity deteriorating further, the Loonie has remained resilient due to higher oil prices in recent weeks, along with broad weakness in the greenback.

Central Bank Notes:

• The Bank of Canada maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70% on 4th June – marking the second consecutive meeting where rates were kept on hold.
• The Governing Council noted that the ongoing increase and decrease of various U.S. tariffs, coupled with highly uncertain outcomes of bilateral trade negotiations and tariff rates remaining well above their levels at the beginning of 2025, placed downside risks on growth and lifted inflation expectations, warranting caution regarding the continuation of monetary easing.
• The higher uncertainty stemmed from the absence of a clear tariff path by the U.S. and persistent threats of new trade actions, which prompted the BoC Governing Council to highlight risks such as the extent to which higher US tariffs reduce demand for Canadian exports.
• Canada’s economic growth in the first quarter came in at 2.2%, slightly stronger than the original forecast, while the composition of GDP growth was largely as expected. Consumption slowed from its very strong fourth-quarter pace, but continued to grow despite a large drop in consumer confidence.
• Housing activity was down, driven by a sharp contraction in resales, while government spending also declined. The economy is expected to be considerably weaker in the second quarter, with the strength in exports and inventories reversing and final domestic demand remaining subdued.
• The labour market has weakened, particularly in trade-intensive sectors, and unemployment has risen to 6.9% while CPI inflation eased to 1.7% in April, as the elimination of the federal consumer carbon tax reduced inflation by 0.6%.
• The Bank’s preferred measures of core inflation, as well as other measures of underlying inflation, moved up, while recent surveys indicate that households continue to expect that tariffs will raise prices and many businesses say they intend to pass on the costs of higher tariffs.
• The Governing Council will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs while proceeding carefully, with particular attention to the risks and uncertainties facing the Canadian economy.
• The Governing Council will focus on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval by supporting economic growth while ensuring that inflation remains well-controlled.
• The next meeting is on 30 July 2025.

Next 24 Hours Bias

Medium Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

In a similar vein to the API stockpiles, the EIA crude oil inventories declined for the second successive week as 4.3 million barrels of crude were removed from storage, significantly higher than the forecast of a 2.9 million draw. However, the downward trend in U.S. inventories could not keep oil prices supported as Saudi Arabia announced plans to cut its July prices for Asian crude buyers, marking the lowest prices in four years. The price cuts by Saudi Arabia, a key oil producer within OPEC+, follows the organisation’s move over the weekend to increase output by 411,000 barrels per day for July. After coming within a whisker of the $64 mark on Wednesday, WTI oil initially tumbled nearly 2% before settling higher at around $62.70 per barrel by the end of the U.S. trading hours.

Next 24 Hours Bias

Medium Bearish

The post IC Markets Asia Fundamental Forecast | 5 June 2025 first appeared on IC Markets | Official Blog.

Japan finance ministry 30 year Japanese Government Bond auction bid-to-cover ratio 2.92

• prior sale 3.07
• & 12-month average 3.39
• weakest demand ratio since 2023
• average yield 2.904%, yield at lowest accepted price 2.938%
• auction tail at 0.49 yen versus 0.30 yen at previous auction

Not strong results in Japan.

This article was written by Eamonn Sheridan at www.forexlive.com.

• Federal Reserve’s Kugler and Harker to speak on economy & policy Thursday
• China Securities Journal says PBOC may cut RRR to ensure reasonable liquidity in 2h25
• Bank of England Monetary Policy Committee member Megan Greene speaks Thursday
• China Caixin Services PMI (May) 51.1 (prior 50.7)
• Australian April goods exports -2.4% m/m (prior +7.6%)
• More on: US auto suppliers urge swift response to China’s rare earth export curbs
• PBOC sets USD/ CNY mid-point today at 7.1865 (vs. estimate at 7.1762)
• Amazon prepares to test humanoid robots for delivering packages
• Ukraine and the US are working to launch a joint minerals fund by the end of the year
• US auto group urge “immediate and decisive action” on access to Chinese rare earths
• Japan April inflation adjusted wages -1.8% y/y, down for a fourth month
• Fed’s Kashkari says the labour market is showing some signs of slowing down
• RBC says the USD ‘remains extremely overvalued’, ‘much more weakness still lies ahead’
• Czech central bank board member prefers to leave rates on hold at June meeting
• Musk’s opposition is ‘one disagreement’ in an otherwise harmonious relationship
• TD add another RBA 2025 interest rate cut to their forecast: 25bp cut in August, November
• Deutsche Bank is maintaining its call for a 1.50% ECB terminal rate, but notes upside risk
• Saudi Arabia pushing OPEC+ for a faster pace of oil production increases in coming months
• ICYMI: Saudi Arabia lowered some July price of crude for Asia, raised for Northwest Europe
• Forexlive Americas FX news wrap: US dollar falls after soft ADP and ISM data
• Trade ideas thread – Thursday, 5 June, insightful charts, technical analysis, ideas

Major currencies traded in narrow ranges during the Asian session, with light news flow and the focus on Japanese wage data and China’s Caixin Services PMI.

In Japan, wages rose year-on-year in April, with base pay recording its fastest growth in four months. However, high inflation continued to erode household purchasing power, with real wages falling for the fourth straight month. The ongoing decline in inflation-adjusted earnings is another complication the Bank of Japan faces in its plans to normalise policy.

China’s Caixin/S&P Global Services PMI for May rose to 51.1 from 50.7 in April, marking 29 consecutive months of expansion since January 2023. The print slightly beat expectations (51.0), with improved domestic demand and business confidence. However, foreign demand slipped into contraction for the first time this year. The Composite PMI dropped to 49.6—its lowest since December 2022—reflecting the drag from earlier-released weak manufacturing data.

FX markets remained subdued, with traders now turning attention to the upcoming European Central Bank decision, where a 25bp rate cut is widely expected.

Decision due from the ECB at 1215 GMT/0815 US Eastern time. Lagarde’s press conference follows a half hour later.

• This snapshot from the ForexLive economic data calendar, access it here.
• The times in the left-most column are GMT.
• The numbers in the right-most column are the ‘prior’ (previous month/quarter as the case may be) result. The number in the column next to that, where there is a number, is the consensus median expected.

This article was written by Eamonn Sheridan at www.forexlive.com.

China Caixin / S&P PMI for May 2025

Services 51.1

• expected 51.0, prior 50.7
• overall demand and business confidence improved
• foreign demand contracted for the first time this year
• new export business contracted marginally, the first time since December
• job market posted a slight expansion in May, breaking a two-month contraction, with the corresponding gauge hitting a six-month high
• input costs grew at their quickest pace in seven months due to rising purchasing prices and labor costs
• prices charged to customers fell for the fourth straight month

Composite 49.6, dragged down by the soft manufacturing PMI (China Caixin May 2025 Manufacturing PMI 48.3 (prior 50.4!))

• prior 51.1
• 49.6 is the lowest since December 2022

This article was written by Eamonn Sheridan at www.forexlive.com.

Australian trade balance data for April 2025

5413mn surplus

• expected 6000mn, prior 6900mn

Exports -2.4% m/m

• prior +7.6%

Imports +1.1%

• prior -2.2%

This article was written by Eamonn Sheridan at www.forexlive.com.

A leading U.S. auto supplier group is warning that China’s restrictions on rare earth and critical mineral exports pose an urgent threat to the industry. MEMA, the Vehicle Suppliers Association, said on Wednesday that parts manufacturers are already facing “serious, real-time risks” to their supply chains.

The group stressed that the situation remains unresolved and that concerns are mounting, calling for “immediate and decisive action” to avoid widespread disruption and economic fallout across the vehicle supply sector.

–

Earlier headline here:

• US auto group urge “immediate and decisive action” on access to Chinese rare earths

This article was written by Eamonn Sheridan at www.forexlive.com.

Ukraine and the United States are working to launch a joint minerals fund by the end of the year, with the first board meeting expected in July, Ukraine’s First Deputy Prime Minister Yulia Svyrydenko said during a visit to Washington.

Svyrydenko met with U.S. Treasury Secretary Scott Bessent and the U.S. Development Finance Corporation to outline next steps, including decisions on seed capital and a multi-year investment strategy.

• The fund stems from a minerals development agreement signed in April after intense negotiations that improved terms for Kyiv.
• The deal, strongly backed by Trump, was later ratified by Ukraine’s parliament and is seen as a key step in strengthening economic ties.

• The agreement also helped ease tensions between Trump and Ukrainian President Volodymyr Zelenskiy following earlier friction over the path to resolving Ukraine’s ongoing war with Russia.

This article was written by Eamonn Sheridan at www.forexlive.com.

US auto supplier group says “immediate and decisive action is needed to prevent widespread disruption and economic fallout across the vehicle supplier sector” on Chinese rare earth issue.

—

The warning from the U.S. auto supplier group reflects growing concerns that tightening Chinese controls over rare earth exports could severely disrupt the supply chains critical to vehicle manufacturing. Rare earth elements are essential components in electric motors, batteries, and various high-tech systems used in modern vehicles. With China dominating global production and processing of these materials, any restrictions threaten to stall production lines, increase costs, and delay vehicle deliveries. The group’s call for “immediate and decisive action” underscores the urgency to secure alternative sources or build domestic capacity to avoid a potential economic shock across the entire automotive supply chain.

This article was written by Eamonn Sheridan at www.forexlive.com.

Real wages fell for a fourth consecutive month in Japan in April

-1.8% y/y,

• from -1.8% also in March and -1.5% in
  February

Base pay +2.2% y/y, the fastest in four months

• Overtime pay +0.8%

Total average cash earnings, or nominal pay, +2.3%

• from +2.3% also in March

—

Inflation-adjusted real wages are a key determinant of households’ purchasing power. The prolonged decline will troubl;e Bank of Japan rate hike desires.

This article was written by Eamonn Sheridan at www.forexlive.com.

RBC Global Asset Management says the U.S. dollar’s recent slide could be signalling a broader shift in investor sentiment away from American assets. In a note to clients, the firm points to the 10% decline in the U.S. Dollar Index since January—despite ongoing market volatility and elevated investor anxiety that would typically support the greenback.

RBC argues that the scale and timing of the move may reflect doubts over the U.S.’s “exceptionalism” and its traditional safe-haven status. With the dollar still appearing significantly overvalued, the firm sees potential for further weakness ahead. For global investors, this has real implications: the declining dollar has weighed on the relative performance of U.S. stocks and bonds so far this year, especially when measured against international peers on a currency-adjusted basis.

—-

10 year perspective:

This article was written by Eamonn Sheridan at www.forexlive.com.

White House official:

• Musk’s opposition is ‘one disagreement’ in an otherwise harmonious relationship
• The White House will not consult every policy decision with Elon Musk
• Trump is committed to getting the bill passed despite opposition from Musk

This is in response to Musk’s oppostiion to Trump’s ‘big bill’ that will skyrocket US debt and fiscal troubles:

• Musk described it as a “disgusting abomination”

Gonna need a new hat

This article was written by Eamonn Sheridan at www.forexlive.com.

Saudi Arabia is pushing for OPEC+ to maintain its faster pace of oil production increases in the coming months, aiming to regain market share rather than support prices, according to sources familiar with the matter. This according to a Bloomberg (gated) report.

In summary:

• Saudis wants at least 411,000 barrels per day added in both August and possibly September
• major shift in Saudi strategy — moving away from price defence via output cuts to actively increasing supply, even at the cost of lower prices
• some OPEC+ members like Russia, Algeria, and Oman wanted to pause the increases
• Saudi Arabia sees high seasonal demand as justification to continue

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The next OPEC+ meeting is scheduled for July 6, when output policy for August will be decided.

Brent update:

This article was written by Eamonn Sheridan at www.forexlive.com.