Major currency pairs are confined within familiar weekly ranges early Thursday as investors brace for key macroeconomic events. The European Central Bank (ECB) will announce its interest rate decision, followed by updated staff projections and ECB President Christine Lagarde’s press conference. In the US, the economic calendar features May’s Challenger Job Cuts, Initial Jobless Claims, and the April Goods Trade Balance. Additionally, several Federal Reserve (Fed) officials are scheduled to speak later in the day, offering potential clues on future policy direction.
US Dollar Weakens After Soft Data
The US Dollar (USD) remains under pressure after disappointing data on Wednesday. ADP’s employment report showed private sector jobs rose by just 37,000 in May—far below the 115,000 forecast—raising concerns over labor market softness. Adding to the downbeat tone, the ISM Services PMI dipped to 49.9 in May, entering contraction territory for the first time since June 2024. As a result, the USD Index dropped over 0.4%, stabilizing near 99.00 early Thursday as markets await further catalysts.
US stock index futures are trading marginally lower following a mixed Wall Street session, reflecting investor caution amid growing uncertainty over US economic resilience and Fed rate expectations.
ECB in Focus, Euro Supported by German Data
In Europe, all eyes are on the ECB’s rate announcement. The central bank is widely expected to cut interest rates by 25 basis points in its June meeting. Traders will pay close attention to the updated macroeconomic forecasts and Lagarde’s comments for insights into the future rate path.
On the data front, Germany’s Factory Orders surprised to the upside, rising 0.6% month-over-month in April. While this marks a slowdown from March’s 3.4% increase, it beat expectations for a 1% decline, offering some encouragement about the Eurozone’s industrial outlook.
The EUR/USD pair remains firm above 1.1400 ahead of the ECB event, underpinned by a weaker Dollar and cautious optimism around regional data.
Currency Market Snapshot
GBP/USD rose modestly on Wednesday amid broad USD weakness and remains stable around 1.3550 in early European trading. The Pound’s momentum is restrained as markets await fresh domestic catalysts and more clarity on global risk sentiment.
USD/JPY dropped nearly 0.9% on Wednesday, pressured by falling US yields and dovish Fed expectations. The pair is attempting a mild rebound, trading just above 143.00 early Thursday, though gains remain limited by geopolitical risks and cautious sentiment.
AUD/USD holds around 0.6500 after gaining 0.5% the previous day. The Aussie is supported by improved sentiment following China’s Caixin Services PMI, which rose to 51.1 in May from 50.7 in April, signaling modest expansion in the services sector.
Gold (XAU/USD) trades in a tight range above $3,350 following minor gains on Wednesday. Safe-haven demand remains supported by geopolitical tensions, weak US data, and uncertainty over the upcoming US Nonfarm Payrolls (NFP) report on Friday.
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