The Morning Update

The USD is flat, oil prices are firm, equity markets are up, and US yields are mixed, with investors cautious ahead of Friday's jobs report. The USD holds steady despite weak economic data and ongoing trade uncertainties, and the euro is flat ahead of the expected ECB rate cut. Global equities increased as investors remain cautious ahead of Friday's payroll data. In Europe, the ECB is expected to lower rates for the eighth time, but is expected to keep rates on hold into July and August during the expected US trade talks. Friday's US jobs report is forecasted to show that growth in nonfarm payrolls slowed and the unemployment rate remained steady. "Consensus is for lower job creation," said Ulrich Urbahn, at Berenberg. "I think there must be a big surprise to the downside of volatility to increase." Elsewhere, oil prices edge higher amid Fed policy and ongoing trade uncertainty; Bitcoin slips to $104.8k, gold prices firm, and silver prices rally. In focus today, the ECB rate decision & press conference, US Initial Jobless claims, Nonfarm productivity, CAD Ivey PMI, and Fed's Kugler, Harker, and Scmid's speeches to help guide currency market direction.

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In the news. Trump's 'big beautiful bill' will swell US debt by $2.4tn, warns fiscal watchdog. Musk whips opposition to Trump tax plan: "Kill the Bill". PM Carney holds back on tariff retaliation, says US-Canada talks are progressing. Trump signs travel ban for 12 countries, including Afghanistan. Modi was not invited to the G7 summit in a sign of frayed Canada ties. Alberta fire danger eases with rain as oil output is restored. Procter & Gamble to cut 7,000 jobs to rein in costs as tariff uncertainty looms. China's May services activity grows despite US tariff concerns, Caixin PMI shows. Europe awaits the ECB rate cut after the US-driven bond rally. German industrial orders rise, pointing to cyclical recovery.

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In currency markets. The Euro eases ahead of the ECB interest rate decision, CAD firms follow the BoC's decision to keep rates on hold, and the USD is sidelined ahead of Friday's key jobs data. CNY and Asian currencies, on average, are up by 0.1% against the USD. Currency markets are mixed, with JPY weakened by 0.35%, CHF fell 0.2%, CZK down 0.1%, MXN, DKK & SEK flat, NOK firmed 0.2%, AUD, NZD & ZAR strengthened by 0.35% against the USD.

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In commodity markets. Oil and Gold prices firmed by 0.3%. Natural Gas prices weakened by 0.9%. Gold prices are up by 0.4%. Silver prices rallied 3.2%. Copper prices strengthened by 2.5%. Wheat prices rose by 0.6%, and Soybean prices eased by 0.25%.

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CAD retests fresh eight-month highs following the Bank of Canada's decision to keep interest rates on hold at 2.75% again, as 'uncertainty remains high.' "The Canadian economy is softer but not sharply weaker. And we've seen some firmness in recent inflation data," said Bank of Canada governor Tiff Macklem in prepared remarks in Ottawa. Domestically, Canadian companies and a major union said on Wednesday that higher US tariffs on steel and aluminum could result in more job losses and lost sales. In focus today is the CAD Ivey PMI report, which is expected to improve slightly, and then Friday's key Canadian jobs report

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EURCAD continues to ease, falling 0.4% in June following the BoC keeping rates on hold, while the ECB is widely expected to cut its domestic interest rates today.

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EUR holds steady above 1.1400 ahead of the ECB policy announcements. The euro is expected to remain within its current trading range as investors stay on the sidelines ahead of today's ECB interest rate decision. The ECB is expected to lower rates for an eighth time, taking interest rates to 2%, while markets expect the ECB will pause further rate cuts during the summer. "Reasons for the ECB to be cautious moving forward relate both to the need for more information on the trade war, and retaliatory measures in particular, and on the German fiscal easing," Societe Generale economist Anatoli Annenkov said. We expect markets to remain sidelined ahead of Friday's key US jobs report.

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GBPEUR edges higher ahead of today's expected ECB interest rate cut.

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GBP holds above 1.3550 amid a cautious mood ahead of Friday's US jobs report. With the lack of domestic economic data releases, the pound continues to tread water while finding underlying support after the UK escaped additional US steel and aluminum tariffs on Wednesday. Investors will be monitoring the ECB's policy announcements. A dovish tone could trigger capital outflows from the euro into the pound. Intraday, the Initial Jobless claims will be monitored, ahead of Friday's key US NFP report.