Trump was on the wires on Friday, stating that China had “violated its agreement” with the US. Jamieson Greer, Office of the United States Trade Representative, clarified that China isn't removing trade countermeasures quick enough. There was an initial drop in risk assets before moves settled down - by the end of European trade, markets finished relatively flat and the dollar marginally stronger.
German CPI numbers and the US core PCE numbers both came in as expected.
*Daily move - against G10 rates at 7:00 am, 02.06.25
** Indicative rates - interbank rates at 7:00 am, 02.06.25
USD starts the week on the back foot due to renewed trade tensions. China's Ministry of Commerce issued a statement accusing the US of violating its recent trade deal. Donald Trump vowed to double steel and aluminium levies to 50%, with the change set to take effect on Wednesday. The UK is said to be urging Trump to apply their zero-tariff accord. The EU has also spoken out against the latest announcements, threatening countermeasures.
This week's main focus will fall on Friday's US job numbers, where markets will be watching for signs of cracks in the job market due to tariffs and trade policy uncertainty. Markets are expecting the numbers to show signs of a cooling job market. Before that, we have ISM manufacturing numbers on Monday, and service sector numbers on Thursday - also expected to be soft in light of trade policy uncertainty.
Closer to home, the ECB will likely cut rates by 25bp on Thursday, and before then, on Tuesday, CPI numbers are expected to show cooling inflationary pressures in the Eurozone.
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