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Shares of Tesla are down 4.5% today as the fallout from Trump and Musk continues:

• Would have won Pennsylvania without Musk
• He disappointed
• He hasn’t said bad about me but that will be next
• I don’t know if we’ll have a great relationship anymore
• We said no to Musk’s NASA choice

“Elon and I had a great relationship. I don’t know if we will anymore,” Trump said.

There is a lot riding on the June 12 robotaxi event. Indications remain that Elon has badly tarnished the Tesla brand, at least in some markets.

This article was written by Adam Button at www.forexlive.com.

It’s still very early in the quarterly cycle so the numbers are volatile.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2025 is 3.8 percent
on June 5, down from 4.6 percent on June 2. After recent releases from
the US Census Bureau, the US Bureau of Economic Analysis, and the
Institute for Supply Management, the nowcasts of second-quarter real
personal consumption expenditures growth and real gross private domestic
investment growth decreased from 4.0 percent and 0.5 percent,
respectively, to 2.6 percent and -2.2 percent, while the nowcast of the
contribution of net exports to annualized second-quarter real GDP growth
increased from 1.36 percentage points to 2.01 percentage points.

I wouldn’t get too excited about this.

This article was written by Adam Button at www.forexlive.com.

Gold looked like it might break out earlier today on strong European and Asia buying but the selling has been steady in US trade and picked up in the last two hours.

The reversal coincides with a turn higher in US Treasury yields and optimism about US-China trade following a call between Trump and Xi. There were no meaningful announcements following the call but the sides agreed to a round of meetings led by top deputies. The market is optimistic that it means the path to lower trade tensions is intact.

Gold has largely been a trade war barometer this year with prices exploding after the ‘Liberation Day’ tariffs and hitting an all time high at $3500. Prices backed off after Trump delayed them but gold has held above pre-tariff levels. Gold could also be getting a boost from Ukraine and Iran angst and US deficit concerns.

Today’s price action is disappointing for the bulls though. Yesterday I highlighted the importance of breaking the May high of $3437 in order to extend the uptrend.

This article was written by Adam Button at www.forexlive.com.

Positive comment, though not surprising. We’ll see what’s coming up in the Trump press appearance today.

This article was written by Adam Button at www.forexlive.com.

The market was only priced for a 20% chance of a cut in July so this isn’t a surprise. The market is only pricing in one further cut from the ECB in this cycle.

This article was written by Adam Button at www.forexlive.com.

• Call resulted in a very positive conclusion for both countries
• There should
  no longer be any questions respecting the complexity of Rare Earth
  products
• Our respective teams will be meeting shortly
• Conversation was focused on trade, no Ukraine or Iran

So they’ve scheduled trade talks, which at least means there is some kind of basis for moving forward and things should remain static in the interim.

Full text from Trump:

I just concluded a very good phone call with President Xi, of China,
discussing some of the intricacies of our recently made, and agreed to,
Trade Deal. The call lasted approximately one and a half hours, and
resulted in a very positive conclusion for both Countries. There should
no longer be any questions respecting the complexity of Rare Earth
products. Our respective teams will be meeting shortly at a location to
be determined. We will be represented by Secretary of the Treasury Scott
Bessent, Secretary of Commerce Howard Lutnick, and United States Trade
Representative, Ambassador Jamieson Greer. During the conversation,
President Xi graciously invited the First Lady and me to visit China,
and I reciprocated. As Presidents of two Great Nations, this is
something that we both look forward to doing. The conversation was
focused almost entirely on TRADE. Nothing was discussed concerning
Russia/Ukraine, or Iran. We will inform the Media as to scheduling and
location of the soon to be meeting. Thank you for your attention to this
matter!

This isn’t exactly a ‘breakthrough’ and I suspect many in the market were hoping for something more tangible in terms of some kind of tariff relief.

This article was written by Adam Button at www.forexlive.com.

• The US and China should increase cooperation and trade
• The US and China should reduce misunderstandings

It’s not clear if these comments were part of the US call, a response to it or something else. My first impression is that this doesn’t sound like any kind of ‘deal’ but rather that the call was mainly to prevent things from worsening.

This article was written by Adam Button at www.forexlive.com.

Japan’s chief trade negotiator Akazawa says there is no change in Japan’s stance and they continue to want a full reprieve from US tariffs. Now there is somewhat of an incentive to take a hawkish public stance here as Japan could be headed for a snap election at any point as Prime Minister Shigeru Ishiba holds a minority in the lower house.

There is also the House of Councillors election that must be held by July 22.

That all makes it very tough to negotiate.

This article was written by Adam Button at www.forexlive.com.

Goldman Sachs expects 125k in payroll growth for May—in line with consensus—alongside a steady unemployment rate of 4.2%. Wage growth is projected at 0.3% m/m, but federal government hiring may drag on headline numbers due to workforce cuts amid tariff-related uncertainty.

Key Points:

• Nonfarm payrolls: +125k, with solid gains indicated by big data tracking tools.

• Unemployment rate: Steady at 4.2%, reflecting resilience in labor markets.

• Wages: Average hourly earnings to rise 0.3% m/m, with neutral calendar effects.

• Federal jobs: Expected 10k decline in federal government payrolls due to staffing reductions, likely a result of elevated trade policy uncertainty.

Conclusion:

Goldman sees a moderate and balanced labor report for May, reflecting continued growth but with underlying fragility from policy risks. The report should keep the Fed patient, rather than prompt any imminent policy shifts.

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This article was written by Adam Button at www.forexlive.com.

Beijing has confirmed that the phone call with Trump is ongoing in a brief statement:

So far, we haven’t heard from Trump, who is likely to be the first person to send a message when it’s over. Keep an eye on Truth Social.

The Australian and New Zealand dollars are the top performing currencies today, up around 50 pips each. Both are at the highs of the day and the Australian dollar is challenging the May peak. If that breaks, it will take us to the best level since November and I’d expect some buy stops.

I fear we could get a ‘sell-the-fact’ trade on the readout. The market has been rallying on the Trump-Xi call since Monday and particularly since Tuesday after it was confirmed that diplomats spoke.

Of course, if we get a true climb-down on trade from both sides and the seeds of an actual deal then there is immense room to the upside for risk assets.

This article was written by Adam Button at www.forexlive.com.

Trump and Xi held a phone call today, according to Xinhua.

That should be good news as the topics on calls like this are almost always pre-cleared and scripted.

It’s not exactly clear when the call was held or if it’s ongoing now but expect Trump to write about it on Truth Social soon after it’s over.

It’s tough to say exactly what’s priced in regarding any actions coming out of this. I don’t think the market is expecting tariff rates to drop but that would be an upside risks. At minimum, we’d expect them to undo some of the rare earth/chip curbs lately.

This article was written by Adam Button at www.forexlive.com.

• Prior was -140.5B (revised to -138.3B)
• Goods trade balance -86.97B vs -162.2B prior (prelim was -87.62B)
• Prior goods trade balance was -147.85B
• Exports +3.0% vs +0.2% prior
• Imports -16.3% vs +4.4% prior

March was the largest-ever trade balance number as importers front-ran the Liberation Day tariffs. In April, imports fell dramatically and that caused a massive rebound in the trade balance. Notably though, April’s balance is still only back to where it was in late-2023. I would expect some further improvement in May but it’s going to be a mess as we work through the tariffs.

Imports fell $68.9 billion in the month with about half of that as consumer goods; within consumer goods, a big chunk of that was pharma, highlighting how easy it is to import and stockpile pills.

Year-to-date, the goods and services deficit increased $179.3 billion, or 65.7%, from the same period in 2024.

USD/JPY was trading at 143.17 ahead of the data but actually fell to 142.84. That’s because initial jobless claims data released at the same time was dollar-negative.

This article was written by Adam Button at www.forexlive.com.