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The Mexican peso is ground zero in the latest round of the tariff fight and yet other assets have fallen harder. We explain why and look at implications that most are missing. Non-farm payrolls are due on Friday. GBP is the highest performer on weakening odds of Boris Johnson becoming next PM after the Brexit Party lost yesterday's bi-electrions in Peterborough. Here's what Ashraf said about GBP and Johnson 2 weeks ago. US and Canada jobs are due next.

The most-notable aspect about the Mexican peso is how little it has fallen since Trump first threatened tariffs. On Thursday, he ramped up warnings saying “not nearly enough” had been offered to stop them.

Peso dynamics suggest how minimal the expectations of Trump following through on tariffs on Monday. MXN is down only 2.65% against the US dollar since Trump's surprise threat on May 30. That's a relatively small move in the emerging market space and even when you consider that the US dollar has lost ground broadly in that same time frame, it's still surprisingly small when you consider that on the night Trump was elected it fell 12% and now it's facing escalating tariffs and a tight deadline.

One interpretation would be that tariffs remain a low-probability event or won't last long. But that doesn't explain why the broad market is expressing a larger measure of concern. Oil is down 12% since the announcement. Treasury yields are down 33 basis points at the front-end and more than a full rate cut has been priced in over the past week alone.

The market is thinking this isn't a Mexico-only problem. The message is that Trump is increasingly willing to turn to tariffs. On Thursday he said “the higher tariffs go, the higher the number of companies that will move back to the USA.”

Could markets be coming to terms with the idea that Trump really believes in tariffs and that they benefit the US? That sentiment is being extended to China and European autos and to any other potential dispute that might come up in Presidency. He really is Tariff Man.

He said Thursday that he will decide on more Chinese tariffs in two weeks and half his administration is going to try to talk him out of it but we have to assume a better-than-50% chance he does it. In the short-term, if a deal is done to avert tariffs on Mexico, watch for how he frames it. If he comes out afterwards and says 'tariffs work and that's why we got a deal' then the entire exercise starts to look like a PR campaign for tariffs – an effort to boost support for the tariff war to come.

First, the market will be looking to Friday's non-farm payrolls report. The economist consensus is +180K but the market is undoubtedly braced for something worse after ADP data showed the worst jobs growth in nine years. Anything better than 140K will be a sigh of relief for markets. At the same time, watch out if it's above 220K because a number that strong may rattle belief in a rate cut.

The attention of financial markets is still focused on US trade disputes with other countries. Thursday was the second day of negotiations on trade and migration between the representatives of the U.S. and Mexico. During the day, there were reports that the US administration may postpone the date for the introduction of tariffs, which is now scheduled on Monday. Reports of a softening position supported the risk-on mood on the markets, reinforcing the purchase of stocks. However, on Friday morning, markets are taking a more cautious position in anticipation of the U.S. employment report.

Stocks

US stocks rose 1% on Thursday. SPX rose 3.9% this week after touching 2.5-month lows. Today is NFP- day, and trading activity can be reduced until the release of the U.S. statistics. Further rebound from the current 2850 may lead SPX to an important MA(50) level at that is at 2870 now. At the same time, it is worth noting that the markets have been growing in recent days in anticipation of stimulus from central banks, so the worse the data is, the higher the hopes for a softening of policies that supports stocks.

EURUSD

The European Central Bank on Thursday moved the date before which it promises not to raise interest rates, but at the same time, it did not make hints about soften the policy in the near future. According to money market futures, the likelihood of interest rates cut by 10 bp this year fell from 75% before Draghi's speech to 45% at the moment. The change in expectations provoked a surge in EURUSD to 1.1300. As earlier this week, the growth of the single currency was stopped as it approached this mark. The single currency has been falling since yesterday evening to 1.1260. Nevertheless, EURUSD remains above the former of resistance line of the downward channel, reflecting the possible likely reversal of the euro trend from a decline to growth.

Gold

Gold unsuccessfully tried to hit $1340 on Wednesday and Thursday, which eventually turned into increased selling pressure. The end-of-week factor plays its role, as after strong dynamics market participants are trying to take profits. This is especially relevant now, before the release of important data on the US labour market.

NFP

U.S. Non-Farm Payrolls (scheduled to 12:30 GMT) often have the strongest influence on the markets, deviating markedly from expectations. Market analysts at the beginning of the week, on average, predicted an increase in employment by 180K in May. However, the sharply negative ADP report on employment in the private sector (an increase of 27K against the expected 185K) caused the alertness of market participants. Other labour market indicators are causing much less concern. Weekly unemployment claims changed slightly over the month. Manufacturing ISM Employment Index added 1.3 points to 53.7. Non-manufacturing ISM Employment Index added 4.4 points to 58.1. Such a sharp increase can be a reflection of both a strong number of employed people and growth in wages in the sector.

Yesterday, the EUR/USD currency pair tested the upper boundaries of the short-term and long-term descending channels at the 1.1293 mark. During Friday's morning, the support level formed by the 55– and 100-hour SMAs, the monthly R1 and the weekly R2 at 1.1266.

From a theoretical perspective, it is expected, that the pair could go downside and target the support cluster formed by the Fibonacci 38.20% retracement, the weekly R1 and the 200-hour SMA in the 1.1200/1.1218 range.

However, if the given support level holds, it is expected, that the exchange rate could re-test the given channels. If the trends do not hold, a breakout north could occur in the short run.

On Thursday, the GBP/USD exchange rate tested the support cluster formed by the 55-, 100– and 200-hour SMAs in the 1.2661/1.2701 range.

Note, that the rate is trading near the upper boundary of the short-term descending channel located circa 1.2734. Thus, it is unlikely, that some upside potential could prevail in the nearest future.

If the given support cluster holds, it is likely, that the currency pair could trade sideways in the short term.

On the other hand, some downside potential could prevail in the market. However, it is unlikely, that the pair could drop lower than the 1.2648 mark due to the support of the weekly PP.

During the previous trading session, the USD/JPY currency pair reached the upper boundary of the short-term ascending channel at 108.57. During today's morning, the pair was trading along the given line.

From a theoretical point of view, it is expected, that a reversal south could occur in the nearest future. Note, that the exchange rate has to surpass the Fibonacci 38.20% retracement at 108.44. Also, the rate could be supported by the 55– and 100-hour SMAs located circa 108.25.

On the other hand, the pair could continue to trade up along the upper channel line. It is unlikely, that a breakout north could occur, as the pair is pressured by the 200-hour SMA, currently located at 108.73.

On Thursday, the XAU/USD exchange rate traded sideways around the monthly R2 located at the 1,333.67 mark.

Note, that the rate is supported by the 55-hour moving average, currently located at the 1,333.27 mark. Thus, it is likely, that bulls could prevail in the market in the short term. A possible upside target is the psychological level at 1,345.00.

From the technical perspective, it is unlikely, that the price for gold could decline, as it is supported by the 100-hour SMA at 1,328.28. However, if the given support does not hold, gold could drop to the monthly R1 at 1,319.79.

WTI oil priced rose to new-week high on Friday, in extension of strong rally previous day, sparked by report that US tariffs on Mexico might be delayed.

Additional support to oil price came on Friday from comments of Saudi oil minister, who said that OPEC is close to extend production cut deal which expires at the end of this month.

The members of the cartel have an agreement which needs to be verified by non-OPEC oil producers before the final decision of rollover of agreement. Thursday's positive close of the day was the first since 27 May and generated bullish signal on formation of bullish outside day pattern.

Daily stochastic heads north after reversing from oversold territory and supports recovery scenario, but warning of recovery stall on rising bearish momentum and daily MA's in negative configuration, should not be ignored.

Fresh bulls need more evidence that would be provided by break and close above falling 10SMA ($55.08) and action below here would be seen as extended consolidation and would keep the downside vulnerable.

Larger bears are taking a breather above cracked key supports at $52.64 (200WMA) and $51.61 (Fibo 61.8% of $42.36/$66.58) clear break of which would generate strong bearish signal.

Res: 53.81, 54.60, 55.08, 55.85
Sup: 52.64, 52.10, 51.61, 51.17

European markets are finishing on a strong note as trade optimism grows as the US-China will resume talks for the first time since May 10th and after the ECB adjusted their forward guidance, highlighting that several members discussed the possibility of future interest rate cuts if conditions in the eurozone deteriorated. US futures are also modestly higher ahead of a highly anticipated non-farm payroll report, which is expected to show 175,000 jobs were created in May. Fed rate cut bets could get a boost if we see a big miss with today’s job number, with the June meeting possibly becoming a live meeting. Analysts are waiting to see if the ADP private payroll report, which showed the lowest creation of private sector jobs since March 2010, was the first crack being showed in the strongest part of the US economy, the labor market.

European stocks are green across the board with the CAC 40 leading the way higher with a 1.2% gain, Euro Stoxx 50 is up 0.9%, while the DAX is 0.6% stronger. Both the Dow and S&P futures are up 0.3% in early trade. Gold’s rally is taking a breather, with prices easing 0.2%, while oil benefited from the risk-on tone and positive comments from the Saudi oil minister.

• DAX – ECB driven gains limited by very weak numbers out of Germany
• Trade – Mnuchin and Yi Gang aim to return constructive talks this weekend at G20
• Oil – Saudis remain confident cuts will be extended
• Gold – Shines bright on trade and falling dollar expectations

DAX

The DAX is benefitting from the European Central Bank (ECB) policy decision that delivered a dovish bias that saw the bank focus more on the global picture and not so much to the eurozone rebound that occurred in Q1. Today’s gains from the DAX are slightly underperforming their neighbors as German data on industrial production and exports plunged in April. It appears German factories are no longer benefiting from Brexit stockpiling and industrial production fell to the a near four year low, prompting many to believe first quarter momentum did not carry over. With external risks rising in the eurozone, German manufacturing remains exposed to possible further weakness on Brexit risk and the impending US-Europe tariff battle. If the second quarter continues to disappoint, easing will easily be back on the ECB’s radar.

Bund yields are slightly higher today by 0.6 basis points to -0.235%, but that could be temporary if the markets begin to price in further rate cuts to stimulate domestic demand.

Trade

Markets are beginning to price in optimism that the US-China trade war will see officials resume constructive talks, while the battle in the Americas will see Mexico get hit with tariffs, but it could be short-lived as progress appears to be headed in the right direction.

Overnight, PBOC Governor Yi Gang reminded markets that China has ample policy tools if we continue to see trade tensions escalate. China has been active already in stimulating the economy and Yi Gang noted, “We have plenty of room in interest rates, we have plenty of room in required reserve ratio rate.” This weekend, he will hold talks with Secretary Mnuchin at the G20 finance minister meeting, a resumption of talks since May 10th, the day President Trump rose tariffs on $200 billion in Chinese goods to 25%.

Beijing and Washington’s extended break provided a blow to sentiment that may not easily be repaired even if we do see further progress this weekend. Markets will only be convinced if we hear constructive comments from both Xi and Trump. With a potential onslaught of fresh easing coming from most of the advanced economies central banks, we could see a trade deal be the catalyst needed to help take global equities back to their 2018 highs.

The Mexico and US are making progress with their talks, but might not see enough progress for Mexican goods to avoid the first round of tariffs on June 10th. Vice President Pence stated that the US will impose 5% tariffs on Mexico on Monday as planned. Mexican officials continue to highlight the progress that has been made and markets are starting to believe a sustainable deal is nearing. The Mexican peso is slightly softer against the dollar this morning.

Oil

Crude prices were supported by a united stance from the Russian and Saudi oil ministers, and by the overall optimisitc tone that is embracing risk assets. The energy ministers suggested the oil production cuts are likely to be continued, but that it is not a done deal. Saudi energy minister Al-Falih said he was sure the OPEC + production cuts would be extended and that the need to calibrate and not deepen cuts. Novak noted the contaminate crisis that clogged its main export route was almost fixed and that Poland will get crude shortly. Russia was the first country to suggest moving the OPEC and allies meeting and a date has still yet to be agreed upon. Novak stated that most countries agree on July 2nd to 4th.

West Texas Intermediate crude found major support from the $50.00 a barrel level and could see further bullish momentum if we see something constructive out of the G20 talks this weekend. If the Fed cuts rates sooner than later, that could provide dollar weakness which should be supportive for crude prices. The main driver for higher oil will remain on a pickup in global demand and that would likely stem from positive progress on all trade wars.

Gold

Gold prices are poised for their best weekly performance in six months as trade wars have dealt a strong blow to global growth and further easing appears to be on the way from all the major central banks. The yellow metal is poised for another major move higher if we see further dollar weakness. Fed cut rate bets have been on an upward trajectory and that could be confirmed if we see the strongest part of the US economy, the labor market show signs of weakness.

Notes/Observations

• Mexico-US to continue talks ahead of the looming Monday deadline on implementation of tariffs against Mexico
• Germany Apr Industrial Production falls the most in almost 4 years; Bundesbank slashes 2019 growth outlook in its semi-annual update

Asia:

• China PBoC Gov Yi Gang commented that the upcoming trade talks with US Treasury Sec Mnuchin at G20 finance Minister meeting to be 'difficult'; no yuan exchange rate number more important than others*, trade war would have temporary depreciation effect on CNY currency
• Japan Apr Household Spending Y0Y: 1.3% v 2.6%e
• Japan Apr Labor cash Earnings YoY: -0.1% v -0.7%e’ Real Cash Earnings YoY saw its 4th straight decline YoY: -1.1% v -1.5%e)

Europe/Mideast:

• Germany and most other EU governments said to back another delay to Brexit regardless of who becomes the new UK PM. Most European govt’s believe that the future Tory leader would be forced to use extra time for a 2nd referendum to break the Parliamentary deadlock. Final deadline expected to be as late as next Spring
• Spain Sanchez said to seek confirmation vote as PM following king's invitation

Americas:

• US said to be considering delaying Mexico tariffs as implementation date approaches; Mexican officials seek more time for talks
• White House Press Sec Sanders: US is still moving ahead with Mexico tariffs on Monday at this time (Note: Reminder: Tariffs set to go into effect on Monday, Jun 10th)
• Mexico and US considering outlines of deal that could boost Mexico immigration enforcement efforts and give US more latitude to deport asylum-seeker. Mexico said to have pledged to deploy up to 6,000 National Guard troops to the country’s border region with Guatemala, and claimed that this deployment could reduce migration flows to the level of last fall, when arrests were averaging 50K per month.

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.76% at 376.86, FTSE +0.71% at 7,311.45, DAX +0.63% at 12,028.13, CAC-40 +1.26% at 5,344.81, IBEX-35 +0.54% at 9,218.94, FTSE MIB +0.76% at 20,330.50, SMI % at #, S&P 500 Futures +0.29%]

Market Focal Points/Key Themes:

• European Indices trade higher once again ending the week on a strong note tracking stronger Asian Indices and higher US futures following another day of gains yesterday ahead to May Non Farm Payroll data.
• On a quieter morning for corporate news, Novozymes in Denmark declines over 7% after the company cut its forecast citing slowdowns in its US business. Metall Zug falls following a profit warning and lack of 2019 guidance, with Somero Enterprises also declining following a trading update.
• Meanwhile Pantaflix gains on stronger earnings, with Ferrexpo also gaining after upbeat outlook.
• In other news Mediaset Espana gains on reports Mediaset is considering options for the unit; Airbus also gains after YTD order figures.
• In the US, Beyond Meat rises sharply following a slight beat in Revenue and stronger guidance continuing the stellar performance since its IPO.

Equities

• Consumer discretionary: Games Workshop [GAW.UK] +4.5% (trading update)
• Financials: NN Group [2NN.DE] +2% (acquisition)
• Healthcare: Sanofi-Aventis [SAN.FR] +4% (appoints CEO from Novartis), NOVOZYMES [NZYMB.DK] -7% (cuts outlook), Orphazyme [ORPHA.DK] +7% (EMA advice)
• Industrials: Somero Enterprises [SOM.UK] -21% (trading update), Airbus [AIR.FR] +2.5% (orders data)
• Materials: Ferrexpo [FXPO.UK] +6% (positive profit alert), Metall Zug [METN.CH] -9% (profit warning)

Speakers

• ECB's Vasiliauskas (Lithuania): inflation outlook was not bad but still needed time to see how economy developed in H2
• Germany Bundesbank cut its growth and inflation outlook for the horizon period. Cut 2019 GDP from 1.6% to 0.6%; 2020 GDP growth from 1.6% to 1.2% and 2021 GDP from 1.5% to 1.3%. It did maintain 2019 inflation at 1.4% but cut 2020 inflation from 1.8% to 1.5% and 2021 inflation from 1.8% to 1.7%. More protracted and clear decline in economic output seemed like an unlikely prospect and did expect domestic exports to begin rising from H2
• Austria Central Bank updated its Economic Outlookwhich cut the GDP growth outlook for 2019 thru 2021 period. Cut 2019 GDP growth from 2.0% to 1.5%; 2020 GDP growth from 1.9% to 1.6% and 2021 GDP growth from 1.7% to 1.6%. ECB's Nowotny (Austria) added that he saw no threat of a recession but eas experiencing a slowdown
• Italy Dep PM Di Maio (5-Star): No discussions with League's Salvini on any potential govt reshuffling
• Russia Econ Min Oreshkin stated that he saw inflation sharply decelerating from July stated that saw
• Russia Energy Min Novak: Opec had achieved market balance; most countries agree on July 2-4th for Opec+ meeting in Vienna. Had agreed to take coordinated action with Saudi Arabia. Global oil demand could grow by less than 1M bpd because of trade wars
• Saudi Energy Min Al-Falih: Oil markets being influenced by factors outside our control. Was aligned with Russia on oil market views. Unacceptable to return to where market was in 2015. Any decision made in July can always be adjusted later in H2. Did not have a price target on oil but believed that $60/barrel for oil did not provide enough confidence for industry to make investments. Believed that OPEC+ would extend oil-cut deal but did not a need to deepen cuts, just calibrate them
• Iraq Oil Ministry stated that it saw no serious difficulty in extending the OPEC+ oil cut production agreement

Currencies/ Fixed Income

• FX price action was mixed ahead of the key release of US payroll data for May. Global central banks have taken a more dovish tone in weeks and the earlier miss in ADP data pondered whether the payrolls might be negative for the 1st time in over 9 years.
• USD: The dollar index yesterday sold off yesterday as the multi-front US trade war with China and Mexico continued to peculate. The US and Mexico appear to be moving in a direction to resolve any disagreements as trades resume today. We still however still do not have a definitive date on the US and China meeting as tariffs have now taken effect on products between the 2 countries. We look to the level around 96.50 to the down side, then the 95.20 region.
• EUR: The Euro had a quite volatile day yesterday during the ECB press conference after members set terms of the next TLTRO. The Euro briefly traded above 1.13 only to be pushed back again, now firming that level of 1.13.
• GBP: Cable traded slightly above 1.27 yesterday as we approach next week where we start to see the Tory leadership race for MP take shape as well as UK GDP and Unemployment economic figures. To the upside we see a level in the 1.2750 region and the 1.26 handle to the downside.
• CNY: The USD/CNY moved above 6.96 in the for its weakest level since Sept. China PBoC Gov Yi Gang commented that no yuan exchange rate number was more important than any others and added that the trade war would have temporary depreciation effect on CNY currency.

Economic Data

• (NL) Netherlands Apr Manufacturing Production M/M: -0.5% v -0.5% prior; Y/Y: -1.2% v -0.4% prior; Industrial Sales Y/Y: +3.1% v -3.8% prior
• (CH) Switzerland May Unemployment Rate: 2.3% v 2.3%e; Unemployment Rate (Seasonally Adj): 2.4% v 2.4%e
• (DE) Germany Apr Industrial Production M/M: -1.9% v -0.5%e; Y/Y: -1.8% v -0.4%e
• (DE) Germany Apr Current Account Balance: €22.6 v €30.9B prior; Trade Balance: €17.9B v €19.5Be; Exports M/M: -3.7% v -0.9%e; Imports M/M: -1.3% v -0.2%e
• (DE) Germany Q1 Labor Costs Q/Q: 1.1% v 0.2% prior; Y/Y: 2.5 v 2.0% prior
• (DK) Denmark Apr Industrial Production M/M: 0.5 v 1.7% prior
• (NO) Norway Apr Industrial Production M/M: +0.2% v -1.3% prior; Y/Y: -4.2% v -6.4% prior
• (NO) Norway Apr Manufacturing Production M/M: 2.2% v 0.4%e; Y/Y: 4.3% v 1.5% prior
• (NO) Norway Apr GDP M/M: 0.2% v 0.2% prior; GDP Mainland M/M: 0.3% v 0.3%e
• (ZA) South Africa May Gross Reserves: $48.3B v $49.5B prior; Net Reserves: $43.2B v $43.2Be
• (FI) Finland Apr Preliminary Trade Balance: -€0.3B v -€0.1B prior
• (AU) Australia May Foreign Reserves: A$79.9B v A$75.7B prior
• (FR) France Apr Trade Balance: -€5.0B v -€4.7Be
• (FR) France Apr Current Account Balance: -€0.8B v -€2.3 B prior
• (FR) France Apr Industrial Production M/M: 0.4% v 0.3%e; Y/Y: 1.15 v 1.0%e
• (FR) France Apr Manufacturing Production M/M: 0.0% v -1.1% prior; Y/Y: 0.5% v 0.6% prior
• (ES) Spain Q1 INE House Price Index Q/Q: 1.5% v 0.4% prior; Y/Y: 6.8% v 6.6% prior
• (CH) Swiss may Foreign Currency Reserves (CHF): 759.9B v 772.0B prior
• (HU) Hungary May CPI M/M: 0.7% v 0.6%e; Y/Y: 3.9% v 3.9%e
• (HU) Hungary Apr Preliminary Trade Balance: €0.2B v €0.6B prior
• (UK) May Halifax House Prices M/M: 0.5% v 0.0%e; 3M/Y: 5.2% v 5.0%e
• (RU) Russia Narrow Money Supply w/e May 31st (RUB): 10.24T v 10.30T prior
• (IT) Italy Apr Retail Sales M/M: 0.0% v -0.3% prior; Y/Y: +4.2% v -3.3% prior
• (CZ) Czech May International Reserves: $143.7B v $143.5B prior
• (UK) BoE/TNS Jun Inflation Quarterly Survey Next 12-month: 3.1% v 3.2% prior
• (HU) Hungary May YTD Budget Balance (HUF): -176.4B v -39.0B prior
• (SG) Singapore May Foreign Reserves: $265.4B v $296.8B prior

Fixed Income Issuance

• (IN) India sold total INR170B vs. INR170B indicated in 2024, 2029, 2043 and 2049 bonds

Looking Ahead

• 05:30 (IN) India to sell combined INR170B in 2024, 2029, 2043 and 2049 bonds
• 06:00 (IE) Ireland May Live Register Monthly Change: No est v -0.7K prior; Live Register Level: No est v 194.7 prior
• 06:00 (PT) Portugal Apr Trade Balance: No est v -€1.9B prior
• 06:00 (HU) Hungary Fin Min Varga
• 06:00 (FI) Finland parliament elects new Speaker
• 06:00 (UK) DMO to sell €4.0B in 1-month, 3-month and 6-month bills £0.5B, £1.5B and £2.0B respectively)
• 06:15 (SE) Sweden Central Bank (Riksbank) Gov Ingves in Paris
• 06:30 (ES) Bank of Spain (BOS) updates economic forecasts
• 06:30 (IS) Iceland to sell 5% Nov 2028 RIKB bond
• 06:45 (US) Daily Libor Fixing
• 07:00 (BR) Brazil May FGV Inflation IGP-DI M/M: 0.3%e v 0.9% prior; Y/Y: 6.8%e v 8.3% prior
• 07:30 (IN) India Weekly Forex Reserves w/e May 31st: No est v $420.0B prior
• 08:00 (PL) Poland May Official Reserves: No est v $117.0B prior
• 08:00 (BR) Brazil May IBGE Inflation IPCA M/M: 0.2%e v 0.6% prior; Y/Y: 4.7%e v 4.9% prior
• 08:00 (CL) Chile May CPI M/M: 0.5%e v 0.3% prior; Y/Y: 2.2%e v 2.0% prior
• 08:00 (UK) Daily Baltic Dry Bulk Index
• 08:00 (IN) India announces upcoming bill issuance (held on Wed)
• 08:30 (US) May Change in Nonfarm Payrolls: +180Ke v +263K prior; Change in Private Payrolls: +172Ke v +236K prior; Change in Manufacturing Payrolls: +3Ke v +4K prior
• 08:30 (US) May Unemployment Rate: 3.6%e v 3.6% prior; Underemployment Rate: No est v 7.3% prior; Labor Force Participation Rate: No est v 62.8% prior
• 08:30 (US) May Average Hourly Earnings M/M: 0.3%e v 0.2% prior; Y/Y: 3.2%e v 3.2% prior; Average Weekly Hours: 34.5e v 34.4 prior
• 08:30 (CA) Canada May Net Change in Employment: +5.0Ke v +106.5K prior; Unemployment Rate: 5.7%e v 6.5% prior; Full Time Employment Change: +9.0Ke v +73.0K prior; Part Time Employment Change: +0.5Ke v +33.6K prior; Participation Rate: 65.8%e v 65.9% prior; Hourly Wage Rate Y/Y: 2.4%e v 2.6% prior
• 08:30 (CA) Canada Q1 Capacity Utilization Rate: 81.0%e v 81.7% prior
• 08:30 (CL) Chile May Trade Balance: $0.6Be v $0.6B prior; Total Exports: $6.5Be v $5.9B prior; Total Imports: $6.0Be v $5.3B prior; Copper Exports: No est v $2.8B prior
• 08:30 (CL) Chile May International Reserves: No est v $37.8B prior
• 09:00 (MX) Mexico May CPI M/M: -0.2%e v +0.1% prior; Y/Y: 4.4%e v 4.4% prior; CPI Core M/M: 0.2%e v 0.5% prior
• 09:00 (RU) Russia May Official Reserve Assets: $495.0Be v $491.1B prior
• 10:00 (US) Apr Wholesale Trade Sales M/M: 0.2%e v 2.3% prior; Wholesale Inventories M/M: 0.7%e v 0.7% prelim
• 11:00 (EU) Potential sovereign ratings after European close (Fitch on Sweden)
• 13:00 (US) Weekly Baker Hughes Rig Count data
• 15:00 (US) Apr Consumer Credit: $13.0Be v $10.3B prior
• 18:00 (CL) Chile Central Bank (BCCh) Interest Rate Decision: expected to leave Overnight Rate Target unchanged at 3.00%
• (UK) PM May steps down as leader of Conservative party
• (G20) G20 Finance Ministers meeting in Fukuoka, Japan

The US dollar is declining against a basket of major currencies. The US dollar index closed in the negative zone (-0.26%). Financial market participants follow events concerning the US trade negotiations with China and Mexico. US President Donald Trump threatened China to introduce new duties on goods worth 'at least' $300 billion. Also, investors have taken a wait-and-see attitude towards the US labor market report for May, which will be published today at 15:30 (GMT+3:00). These statistics may affect the views of the Fed regarding further monetary policy. We recommend paying attention to the difference between the actual and forecasted values.

Yesterday, the ECB, as expected, kept the key marks of monetary policy at the same level. During the press conference after the meeting, the ECB President Mario Draghi said that the regulator improved the forecasts for economic growth and consumer prices in the Eurozone for 2019. The leadership of the Central Bank expects Eurozone GDP to grow by 1.2% this year, rather than 1.1%, as was previously expected. The inflation forecast was raised to 1.3% from 1.2% in March. Some ECB officials are ready to consider resuming a quantitative easing program in case of adverse conditions.

The 'black gold' prices are rising. At the moment, futures for the WTI crude oil are testing a mark of $53.35 per barrel.

Market Indicators

• Yesterday, aggressive purchases were observed in the US stock market: #SPY (+0.65%), #DIA (+0.78%), #QQQ (+0.79%).
• The 10-year US government bonds yield is consolidating. Currently, the indicator is at the level of 2.11-2.12%.

The news feed on 2019.06.07:

• At 15:30 (GMT+3:00) reports on the labor market will be published in the US and Canada.