The USD is mixed vs the 3 major currency pairs with prices near MA levels

The EURUSD, USDJPY and GBPUSD are trading mixed/modestly changed to start the US session. The big 3 are all trading near MA levels indicative of a market that is awaiting the next shove (or the weekend?). The US PCE data will be released (Feds favored inflation reading), US trade data(still super negative as companies front load inventory build before tariffs) and Michigan consumer sentiment will help to shove the dollar one way or the other (or not). The video above outlines the key targets and bias defining levels.

In news today, Bank of England’s Taylor expressed concern over increasing downside risks to the economy, driven by global developments such as a potential trade war, which he said would be negative for growth. He argued that higher inflation is not primarily the result of demand or supply pressures, but rather due to one-time factors like tax hikes and administered price changes. By framing inflation as transitory, Taylor suggests there may be room for further BoE rate cuts as inflation eases.

ECB Executive Board member Fabio Panetta stated that while there is reduced room to cut interest rates further, the Eurozone’s macroeconomic outlook remains weak, with growing risks from trade tensions. He emphasized that future monetary policy decisions should be made on a case-by-case basis, guided by incoming data, inflation trends, and growth projections. Panetta highlighted the importance of maintaining a pragmatic and flexible stance, particularly by closely monitoring liquidity conditions. He noted that disinflation is nearly complete and has not caused major damage to the economy so far. However, he warned that the outcome of ongoing trade negotiations remains uncertain and could have a significant impact on Europe, with tariff-exposed sectors already experiencing falling confidence and weakening expectations for orders and employment.

Overnight, German retail sales fell by -1.1% month-over-month, missing expectations of +0.2%, though the prior month was revised sharply higher to +0.9% from -0.2%. On a year-over-year basis, sales rose 2.3%, beating the 1.8% forecast, with the previous figure also revised up to 3.3% from 2.2%. Despite the monthly decline, upward revisions suggest stronger past performance. Given the volatility of retail sales data, the release is considered non-market moving and is unlikely to influence ECB policy.

Germany’s headline inflation (HICP) rose 2.1% y/y, slightly above the 2.0% forecast but down from 2.2% in April. On a monthly basis, CPI increased 0.2%, beating expectations of 0.1%, though slower than April’s 0.5% rise. Core CPI held steady at 2.9% y/y. While the data came in marginally above forecasts, it’s not expected to shift the ECB’s policy stance at this point.

As outlined above, it will be a busy day of economic releases is ahead, particularly for the US, where inflation, trade, income, and sentiment figures will give markets fresh insight into the health of the economy. Canada also releases GDP data that could influence expectations for Bank of Canada policy.

Here are the key scheduled releases along with their forecasts and previous readings.

• 8:30am – Canada GDP m/m: Forecast 0.1%, Previous -0.2%

• 8:30am – US Core PCE Price Index m/m: Forecast 0.1%, Previous 0.0%. YoY Core 2.5% vs 2.6% last month. Headline MoM is est 0.1% and the YoY 2.2%

• 8:30am – US Goods Trade Balance: Forecast -142.8B, Previous -163.2B

• 8:30am – US Personal Income m/m: Forecast 0.3%, Previous 0.5%

• 8:30am – US Personal Spending m/m: Forecast 0.2%, Previous 0.7%

• 8:30am – US Preliminary Wholesale Inventories m/m: Forecast 0.4%, Previous 0.5%

• 10:00am – US Revised UoM Consumer Sentiment: Forecast 51.1, Previous 50.8

• 10:00am – US Revised UoM 1-yr Inflation Expectations: Preliminary 7.3%, Last month 6.5%

• 10:00am – US Revised UoM 5-yr Inflation Expectations: Preliminary 4.6%, Last month 4.4%

• 12:20pm – US FOMC Member Bostic Speaks

• 7:30pm – US FOMC Member Goolsbee Speaks

US stocka are little changed as implied by the futures:

• Dow industrial averaget -37.22 points
• S&P index futures are implying -3.92 points
• Nasdaq index -4.20 points

In the US debt market to start the US session

• 2 year yield 3.9525%, -1.4 basis points
• 5-year yield 3.987%, -1.0 basis points
• 10-year yield 4.414%, -1.0 basis points
• 30 year yield 4.920%, -0.3 basis points