Focus shifts to US jobs readings
The dollar closed Tuesday broadly flat as macro data and geopolitical risks offset each other, with focus now shifting to upcoming US employment data.
USD
The dollar closed Tuesday with little to show for a session of intraday churn, with the DXY essentially flat just above 99 as competing catalysts largely offset one another. President Trump's claim into the European open that an Israel-Hezbollah ceasefire had been agreed offered some respite from Monday's escalatory leg, but Tehran's continued radio silence following Israeli strikes on Lebanon kept the Hormuz risk premium intact, with a WTI rebound reflecting the same. The major scheduled event was April's JOLTS print, which surged to 7.62 million versus 6.80 million consensus — the highest reading in nearly two years. But given this was driven mostly by a rise in professional & business services openings, which typically see an erratic first estimate, we are inclined to view this as noise, not signal, limiting dollar implications. Today's calendar steps up materially, with the May ADP employment report at 13:15 BST and ISM Services at 15:00 BST, both serving as warmups to Friday's payrolls release. As we flagged yesterday, peace-talk newsflow looks set to continue eclipsing macro fundamentals, with risks skewed dollar-supportive while Hormuz remains in play.
EUR
The euro spent yesterday's session struggling for direction, with EURUSD opening Tuesday in the low 1.16s and closing essentially flat. Eurozone May flash HICP printed at 3.2% YoY, marginally above the 3.1% we had pencilled in, while core inflation jumped to 2.5% from 2.2%, a touch above expectations. The mix did little to reshape ECB pricing, with markets continuing to near fully discount a 25bp hike at next Thursday's meeting. Today's calendar brings final May services PMIs and April PPI, neither of which is typically a major catalyst. As we noted in yesterday's morning report, the structural drag from imported energy costs continues to weigh on the single currency even as energy-led inflation forces the ECB's hand, and we expect Hormuz headlines and Friday's US payrolls to dominate price action from here, leaving us with a modest downside bias on EURUSD into next week's meeting.
GBP
Cable spent Tuesday in remarkably tight ranges, ending the session essentially unchanged as the pound found little domestic impetus to break out of its recent rut. We continue to doubt the pound can sustain rallies, given the familiar combination of an unhelpful terms-of-trade backdrop tied to the closure of Hormuz, a cooling labour market, softer inflation prints, and the political overhang from Labour's local election drubbing and lingering questions over Prime Minister Starmer's tenure. Today's UK calendar is limited to the final May services PMI at 09:30 BST, leaving cable largely headline- and dollar-driven once again. Friday's combination of the May DMP survey and US payrolls rounds out the week, but we suspect both will reinforce the negative skew for sterling risks we have flagged previously.
CAD
The loonie finally showed some signs of stabilisation yesterday, helped by a WTI rebound on a renewed Hormuz concern. Still, the push-pull of factors stemming from conflict in the Middle East remains top of mind, with today's domestic docket light, seeing only May services PMI and Q1 labour productivity due. Friday's Canadian Labour Force Survey alongside US payrolls remains the focal point of the week — a double-header where, as we have repeatedly flagged, the balance of risks remains skewed unfavourably for CAD.