Daily Analysis | Clear Treasury

Our daily analysis of EUR, GBP and USD.

DAILY ANALYSIS

EUR

Yesterday’s ECB meeting was the markets focus for much of the day with the announcement of another 0.25% rate cut, reducing the deposit rate to 2%, bringing the total amount of the eight cuts in this cycle to 2 percentage points.
Despite the ECB lowering its growth and inflation forecasts, some commentators now feel that the ECB are at the end of their rate cutting cycle. During the post meeting conference, ECB President Christine Lagarde stated that her job is done with stable at target inflation.
- However, the market’s view on whether policymakers are done with cutting borrowing costs isn’t so clear. Investors may need to wait until September, when the next round of forecasts is due. Their bets currently put about a 60% chance of another reduction then.
The view that we are at the end was re-enforced by two other ECB Govering Council members with Eastonia’s Mdis Muller saying in an interview that President Christine Lagarde “summarized it nicely yesterday saying that probably we have almost finished the rate-reduction cycle this time around”.
- Then later in the day, Greece’s Yannis Stournaras told Bloomberg Television easing is “nearly done”.
As the market digested these announcements, US Dollar activity then took over FX market activity with EURUSD spiking all the way to a high of 1.15 yesterday.

Even though the ECB should have been yesterday’s main event, another US dollar sell off in the afternoon dominated albeit the catalyst for the sell off being the ECB’s hawkish cut.
Another batch of disappointing US data added further fuel to the sell off:
- Initial Jobless Claims, which jumped to 247K from the previous 239K
- Q1 Nonfarm Productivity, which fell 1.5%
Of course all of this was superseded by the public fallout between Trump and his former friend/advisor Elon Musk. Musk opposes Trump’s “One Big Beautiful Bill”, calling it an abomination and leaving the government last week. However, the fallout escalated in public with both taking damaging shots at each other on social media, so much so Tesla’s share price fell 16%, weighing on Wall Street and the US Dollar.
Back more fundamental matters today in the form of the key Non Farm Payroll and employment data. Markets are keenly watching forecasts of 130K new job positions in May, while the Unemployment Rate is foreseen steady at 4.2%.

Definitely a quiet week for any sterling or UK-specific news with GBPUSD being the main story of note but very much in line with the overall USD trend.
GBPUSD also spiked yesterday at one stage hitting highs above 1.36.

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