News

Fed chair Jerome Powell resisted pressure from President Donald Trump recently to lower interest rates, citing employment and price stability as a priority.

U.S. tariffs are in the spotlight once again in Europe as President Donald Trump’s 50% levy on steel and aluminum imports came into effect Wednesday.

• Prior 53.4
• Composite PMI 51.4
• Prior 52.5

The headline reading slows in May to an 18-month low, as increased uncertainty weighed on growth in demand and activity on the month. The confidence in the outlook also slumped to its lowest since November 2023. HCOB notes that:

“Cooling conditions in Spain’s private sector economy. The headline HCOB Composite PMI Index for Spain remains just
above the growth threshold, supported by weak activity in the service sector, resulting in the softest performance since late
2023. Within the service sector, demand conditions appear constrained—particularly in terms of new business. Reports
frequently link this development to uncertainty stemming from tariffs, especially among internationally engaged clients. New
business from abroad even declined in May.

“The subdued new order situation is also reflected in outstanding business, which fell for the first time in nearly a year-and-ahalf. Nevertheless, companies continue to seek improvements in staffing levels, although the pace of new hires has slowed.
However, as the Spanish economy remains relatively robust – especially compared to other major Eurozone countries –
concerns over headcount reductions should remain limited, even amid ongoing global economic uncertainty. Economic risks
remain tilted to the downside, as reflected in future business expectations, which have dropped below average, suggesting
that customers may act more cautiously in the current environment.

“Service price inflation remained elevated in May. Panellists frequently attributed the rise in input costs to a dual pressure:
increasing wages and suppliers raising their prices – often in response to tariff-related effects. Sale prices indicate that
companies are still able to pass on higher costs to clients, although output price inflation has continued to ease slightly over
the past three months.”

This article was written by Justin Low at www.forexlive.com.

Fundamental
Overview

The USD remains a bit on
the backfoot as the support from the more hawkish repricing in interest rates
expectations got exhausted a couple of weeks ago. The market is now in line
with the Fed’s baseline projection of two cuts in 2025 and we will likely need
strong US data to price out the remaining rate cuts and give the greenback a
boost.

The data for now has been
good but not strong enough to make the market to price out the two cuts
expected by year-end. The next key data will be the prices paid component in
the ISM Services PMI today, the US Jobless Claims figures tomorrow, the NFP
report on Friday and the CPI next week.

On the JPY side, the
currency weakened across the board recently after we got the news that Japan
was considering trimming the issuance of super-long bonds but eventually erased
the losses as some trade tensions gave the yen a short term boost.

On the monetary policy
side, the market is still unsure on another rate hike given that it’s pricing
just 18 bps of tightening by year-end. Nonetheless, that’s been creeping up in
the last few weeks supported also by higher than expected Japanese inflation
data. The US-Japan trade deal and the evolution of inflation will be key for
the BoJ.

USDJPY
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDJPY bounced around the key 142.35 level as the buyers stepped in to
position for a rally back into the 148.32 level. The sellers will need the
price to break below the 142.35 support
to extend the drop into the 140.00 handle next.

USDJPY Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price rejected the most recent swing high level at 144.44 where
the sellers stepped in to target a break below the 142.35 level. The buyers
will need the price to break above this level to open the door for a rally into
the 146.28 level next.

USDJPY Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor support level at 143.67. That’s where we can expect
the buyers to step in with a defined risk below the level to position for a
break above the 144.44 level. The sellers, on the other hand, will look for a
break lower to increase the bearish bets into the 142.35 level next. The red
lines define the average daily range for today.

Upcoming
Catalysts

Today, we have the US ADP and the US ISM Services PMI. Tomorrow,
we get the Japanese wage data and the latest US Jobless Claims figures. On
Friday, we conclude the week with the US NFP report.

Watch the video below

This article was written by Giuseppe Dellamotta at www.forexlive.com.

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Markets Strong JOLTS data kicked of the US economic calendar yesterday. Job openings in April unexpectedly rose from an upwardly revised 7.2 mln to just shy of 7.4 mln. The broader trend – fluctuating between 7-8 mln and near the pre-pandemic high – is indicative of ongoing labour market resilience and strengthens ongoing Fed talk […]

The post Trump’s Import Tariff Raise on Steel and Aluminum Kicks in Today appeared first on Action Forex.

The automaker’s Australian electric vehicle sales hit their highest level in nearly 12 months in May — a bright spot as it struggles with sales elsewhere.