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Platinum: ⬆️ Buy

• Platinum reversed from support zone
•  Likely to rise to resistance level 1100.00

Platinum recently reversed up from the support zone between the support level 1050.00 (former multi-month high from October) and the 38.2% Fibonacci correction of the upward impulse from May.

The upward reversal from this support zone continues the active impulse wave iii of intermediate impulse wave 3 from April.

Platinum can be expected to rise to the next resistance level 1100.00, the breakout of which can lead to further gains toward 1140.00.

Consecutive misses on US data in the North-American Morning Session as the US Services PMI came in at 49.9 vs 52 expected.

Equity markets which rallied back after the miss on ADP Data, gapped right back down as Services Data, which has been holding strong throughout Hike cycles and geopolitical certainty is now showing weakness.

New Orders, deliveries, production and Employment are contracting while prices are increasing at the highest pace since November 2022.

Markets are not pleased with this news as we start to see a shift in PMI data, tariffs are starting to have an impact.

Stock Indices are turning red and the US Dollar takes a toll as the consecutive data misses blocks a third consecutive risk-on session.

The day is not over as the Bank of Canada held rates at 2.75% for the second time, and the Press conference is coming up right now.

USDCAD and USDJPY Intra-day Charts

USDCAD 30m Chart

USDCAD 30M Chart, June 4, 2025. Source: TradingView

USDCAD is making new lows after the BoC stays put and US Data misses, there isn't much support before the Higher Timeframe Support Zone (1.3560 to 1.36) except for an oversold RSI.

BoC Governor Macklem is speaking live here.

USDJPY 30m Chart

USDJPY 30M Chart, June 4, 2025. Source: TradingView

USDJPY broke through the immediate pivot zone at 143.400 to 143.530 with decent selling momentum.

RSI is also oversold though the situation is similar to the USDCAD.

Safe Trades!

The ISM Services index fell 1.7 points to 49.9 in May, coming in well below expectations for a modest improvement to 52.0. This marked the first time that the index fell into contractionary territory since June 2024. Ten of eighteen industries reported growth in May, down from eleven in April and fourteen at the start of the year.

Business activity fell 3.7 points to 50.0, while new orders fell an even sharper 5.9 points to 46.4. The backlog of orders also declined a steep 4.6 points to 43.4. Meanwhile, new exports orders remained relatively unchanged, easing only modestly to 48.5.

The employment subindex managed to improve, moving back into expansion territory after rising 1.7 points to 50.7.

The supplier deliveries index trended higher, increasing by 1.2 points to 52.5. Meanwhile, the prices paid sub-component shot up 3.6 points to 68.7 – the highest level since the end of 2022. Several survey respondents made direct references to tariffs, with one stating “Tariffs remain a challenge, as it is not clear what duties apply. The best plan is still to delay decisions to purchase where possible”.

Key Implications

Today's ISM report is disappointing, as it indicates that even the services sector is starting to feel the pinch from the uncertain trade environment. The details of this morning's report were not particularly encouraging, with steep drops reported in business activity, new orders, and the backlog of orders. The only bright spot was the improvement in the employment subindex, which indicates that despite the challenging environment, services-based businesses are still hanging on to their workers and likely doing some moderate hiring.

The fact that the ISM services index joined its manufacturing counterpart in contractionary territory is a clear sign that the tariff turmoil is rubbing off on the services sector too, with comments from survey respondents that touched on the impact of tariffs also supporting this theme. Additionally, the ongoing increase in the prices paid subindex, indicates that the inflationary pressure from tariffs is sure to make its way on the services sector too.

The Bank of Canada (BoC) held its policy rate at 2.75% for the second consecutive announcement.

In justifying its stand-pat decision the Bank pointed to tariff uncertainty remaining high, the economy is softer, but not sharpy weaker, and there has been some unexpected firmness in inflation. In their calculus these changes netted out to keeping a wait-and-see approach in place as they wait for more information on U.S. trade policy and its impacts.

In more detail, the Bank stated that first quarter economic growth in Canada was above their expectation, but that the composition of growth was basically as expected. They also pointed out that despite softer headline inflation, their preferred measures of inflation have moved up.

Looking forward the Bank expects the economy to be "considerably weaker" in the second quarter as the strength in exports and inventories reverse, and domestic demand remains "subdued".

The forward-looking language on "proceeding carefully" and the risks they are balancing remained unchanged. However, they dropped the comment that monetary policy cannot offset the impacts of a trade war. Instead, focusing on ensuring "price stability through this period of global upheaval" and adding that they will "support economic growth while ensuring inflation remains well controlled".

Key Implications

As markets expected, the Bank of Canada left interest rates unchanged today. At its April decision the BoC said that they would proceed carefully with attention to the risks and uncertainties. Since then, the private sector shed jobs in back-to-back months, demand in the domestic economy came to a halt in the first quarter, and the housing market remains soft. However, core inflation pressures also picked up above 3%, putting the BoC in a bind. Given there isn't any more certainty on tariffs than there was in April, there was a clear consensus among Governing Council to hold policy unchanged as they gained more information.

Looking ahead though, members of Governing Council thought there could be a need for a reduction in the policy rate if the economy weakens and inflation is contained. But, that the Bank is being less forward looking than usual given the high degree of uncertainty on what the tariff picture looks like. We expect that barring a trade negotiation miracle with the Trump administration, Canada's economy is likely to tip into recession this year, and more interest rate cuts will be required.

The Bank of Canada kept its benchmark interest rate steady at 2.75% in its June 2025 decision, meeting the expectations of half the market. This marks the second time rates have been held steady after cutting them by 2.25 percentage points over seven straight decisions.

The governing council pointed out that the back-and-forth changes in US tariffs, along with uncertain trade negotiations and tariff rates staying much higher than at the start of 2025, pose risks to growth and raise inflation expectations.

This has made the council cautious about continuing to ease monetary policy. The uncertainty comes from the lack of a clear US tariff strategy and ongoing threats of new trade actions, leading the council to emphasize risks like how higher US tariffs could lower demand for Canadian exports.

Key Takeaways from Bank of Canada (BoC) Monetary Policy Report

Bank of Canada Governor Macklem went further stating that the recent further increases in US tariffs on steel and aluminum underline the unpredictability of US trade policy.

Bank of Canada Governor Tiff Macklem stated that the Governing Council sees the potential need for a future rate cut if the economy weakens under the pressure of tariffs and if inflationary cost pressures are kept in check. While inflation has shown some unusual volatility, core measures indicate that underlying inflation may be stronger than initially expected.

Macklem noted that it is still too early to observe the direct impact of retaliatory tariffs on consumer price data. He also highlighted that businesses are signaling plans to scale back hiring, and while spending by Canadian households and businesses has shown some resilience, caution is likely to persist.

The Governor reiterated that the Governing Council is currently taking a less forward-looking approach than usual.

Initial Market Reaction

The initial reaction was a mixed one with USD/CAD experiencing some whipsaw price action before Canadian Dollar strength took over pushing USD/CAD down 30 pips to trade 1.3675.

USD/CAD M15 Chart, June 4, 2025

Source: TradingView.com

Canadian Swaps Market sees 46% chance of July rate cut and prices in 36 basis points of additional easing in total this year, down from 42 basis points before the policy decision.

BoC press conference to begin shortly….

We are getting mixed data from the US in the past couple of days, especially as it comes to Employment.

US ADP Private Employment data came in at +37,000 jobs added vs 115,000 Expected - A relatively large miss which may scare markets going towards the NFP number. The previous release was at 60K, and the May report was the lowest in 2 years.

The Private sector employment is getting hurt by interest rates that are still relatively high - the May 2024 report was showing an increase of 164,000 jobs.

Jerome Powell tends to take a close look at the evolution of private companies economic activity in the FED's dual mandate of optimal Employment and inflation - let's see how this situation evolves next month towards the pricing of cuts.

This report comes in as JOLTS Data beat expectations yesterday, with the data showing a rise of 191,000, coming in at 7.391M Job openings vs 7.10M Expectations.

Yesterday's job data showed a decent beat that propelled markets in a risk-on session, equities closed green all around and the S&P found itself 10 points from the 6,000 Milestone, though came off the highs from the Futures overnight session.

It seems though that markets are already turning the page, rallying back as we approach the Services PMI release expected at 52, coming in about 5 minutes.

This ADP Report just gives more focus to the upcoming Non-Farm Payroll report coming in on Friday.

DXY and S&P Intra-Day Charts

DXY 15m Chart

DXY 15M Chart, June 4, 2025. Source: TradingView

The Dollar rallied back strongly yesterday though intra-day charts are showing a Head & Shoulders pattern - we will see now if it gets rejected from the Services PMI Data, coming up.

S&P 500 15m Chart

S&P 15M Chart, June 4, 2025. Source: TradingView

US ISM Services PMI slipped unexpectedly into contraction territory in May, falling from 51.6 to 49.9, its first sub-50 reading since June 2024 and well below market expectations of 52.0.

The drop was driven by sharp declines in both business activity, which fell from 53.7 to the breakeven 50.0, and new orders, which plunged from 52.3 to 46.4, indicating a broad-based pullback in demand. On the brighter side, employment rebounded into slight expansion at 50.7.

The ISM noted that the weakness is "not indicative of a severe contraction", but rather widespread uncertainty, particularly related to trade policy. The average PMI reading over the past three months, at 50.8, suggests overall stagnation and marks a notable shift lower from the 52.8 average of the prior nine months.

Most concerning is the sustained upward pressure on costs. The Prices Index rose to 68.7, its highest level since November 2022. That's the time when CPI rose 7.1%.

Full ISM services release here.

Markets

The award for fastest analysis of today’s ADP employment report goes to… US President Trump. “ADP NUMBER OUT!!! “Too Late” Powell must now LOWER THE RATE. He is unbelievable!!! Europe has lowered NINE TIMES!” We break the analysis down into three parts. First we forgive him the mistake that Europe has lowered rates SEVEN times (by 25 bps) so far. If they do so again tomorrow, it’s nevertheless cumulatively (200 bps) double the amount than the Fed (100 bps in Q4 2024). Second, he’s stepping up the pressure against Fed chair Powell again, a mistake that cost him/his administration dearly earlier this year through loss of investor confidence. Both met in person on May 29. According to the Federal Reserve, the meeting did not include discussions about interest rates. Instead, it focused on general economic developments such as growth, employment, and inflation. Anyway, Fed Chair Powell reiterated that the Fed solely focuses on economic data and won’t abide to political pressure. The US central bank is in wait-and-see mode with the needle currently stuck on (upside) inflation (risks) instead of (downside) employment (risks). Once the unemployment rate starts shooting higher, the Powell Fed nevertheless won’t hesitate to shift its focus in a reactive rather than an anticipative manner. They did the same in September last year when they kicked off the policy normalisation process with a bumper 50 bps rate cut after the Sahm rule recession indicator was triggered in Summer months. The rule suggests high recession risks if the 3-month moving average of the unemployment rate exceeds its lowest level from the past 12 months by more than 0.5 percentage points. For that to happen on Friday with May payrolls, the unemployment rate needs to rise from 4.2% in April to 5.2%. Consensus expects a stabilization… Finally, there’s the ADP employment report which keeps the stagflation narrative intact. Private sector employment increased by 37k in May, less than 114k expected and the lowest tally since March 2023, but hiring still. While hiring is losing momentum after a strong start to the year, pay growth was little changed, holding a robust level for both job-stayers (4.5% Y/Y) and job-changers (7% Y/Y). Whereas the US Treasury market focused on the “FLATION” part of the story following Monday’s manufacturing ISM, they now eyed the “STAG” part going into Friday’s payrolls. US Treasuries rallied with the curve bull flattening. US yields currently cede 3.7 bps (2-yr) to 6.6 bps (30-yr) in a move which has more potential in case of a weak non-manufacturing ISM to be released later today. The outcome for the US dollar is the same as on Monday: downhill with EUR/USD currently trading back above the 1.14 handle. Losses for US equity futures remained limited.

News & Views

Czech consumer prices rose by 0.5% m/m in May, driving the annual rate from 1.8% to 2.4%. That’s more than the market (2%) and the Czech central bank (2.3%) expected. May's upside surprise was largely due to food, which together with alcohol had risen more sharply month over month (1.3% vs. 0.9%). There’s no detailed structure yet, but it seems that services’ inflation momentum was increasing while energy became somewhat cheaper. Looking ahead, KBC Economics expects a short-term inflation peak of close to 2.8% in June. Subsequently, inflation should start to gradually return to the inflation target over the summer and autumn. KBC Economics is keeping the 2025 annual estimate at 2.3%. In a separate release, wage growth slowed only slightly at the start of 2025. According to today's release, annual average wage growth slowed from 6.9% at the end of 2024 to 6.7% in 2025Q1. The numbers suggest a still relatively tight labour market with only gradually fading strong wage dynamics that so far continue to outpace labour productivity dynamics. It’s a key concern and reason for the central bank to tread carefully on future (if any) rate cuts. The Czech crown rallied on the release with EUR/CZK touching a new one-year low. Czech swap yields sprint between 5 and 11 bps higher across the curve.

Bulgaria took another key hurdle in adopting the euro by securing the European Commission’s positive recommendation today. The EC together with the ECB finished the convergence report and both concluded that the one remaining obstacle – above-target inflation – was cleared. It is now up to EU government leaders to discuss Bulgaria’s ascension bid at the June 26-27 summit before finance ministers giving the final approval on July 8. That would leave the country enough time for adoption by 2026.

BoC kept its overnight rate unchanged at 2.75% as expected, opting for caution amid lingering uncertainty over US trade policy. While acknowledging a “softer but not sharply weaker” economy, the Governing Council pointed to recent inflation data that showed “unexpected firmness,” warranting a wait-and-see approach before committing to further policy moves.

In its accompanying statement, BoC emphasized that it is carefully weighing both "downward" and "upward" pressures on inflation. A slower economy is expected to restrain price growth, but tariff-related cost increases could do the opposite.

Key concerns for the central bank include the potential drag from reduced US demand for Canadian exports, spillovers into business confidence and employment, and whether cost increases are being passed on to consumers.

Full BoC statement here.