Yields on the U.S. 10-year Treasury rose following the latest Non-Farm Payrolls (NFP) report, which showed 139,000 jobs added, exceeding expectations of 126,000 but down from 177,000 in the previous month—indicating a moderation in job growth. However, wage growth accelerated to 0.4% month-over-month, up from 0.2% in April, while the unemployment rate remained steady at 4.2%. This combination of slowing employment and rising wages is likely to reinforce the Federal Reserve’s case for maintaining current interest rates. Revisions to March and April employment data also revealed a combined downward adjustment of 95,000 jobs, adding to signs of underlying labor market weakness.
The ISM Services PMI fell into contraction territory at 49.9, compared to 51.6 in the previous month. Notably, the price index component surged to 68.7, up from 65.1 in April—marking the largest two-month increase since 2021. This sharp rise suggests that tariff-related cost pressures may be prompting service providers to pass higher costs onto consumers.
In geopolitical developments, Trump announced a new round of trade talks with China, scheduled for June 9 in London, focusing on critical minerals. The talks aim to resolve ongoing disputes between the world’s two largest economies, each accusing the other of violating prior agreements to reduce tariffs. Both sides are under pressure to de-escalate amid mounting economic costs and trade disruptions.
The OECD also revised its U.S. growth forecast sharply downward, projecting 1.6% growth in 2025 and 1.5% in 2026, compared to a prior estimate of 2.2%. The downgrade reflects frequent shifts in U.S. trade policy, broader economic uncertainty, and a smaller federal workforce. In addition, the OECD expects inflation to rise to 3.2%, possibly nearing 4% by the end of 2025, as tariff effects feed into consumer prices.
As of June 8, the DXY is trading at 99.202, having recovered significantly after testing support at 98.370. The Relative Strength Index (RSI) remains below 50, indicating continued bearish momentum on the daily chart. Resistance levels are noted at 99.590 and 100.000, while support lies at 98.930 and 98.677.
Looking ahead, the week brings several key data releases: CPI on June 11, Core PPI on June 12, and Consumer Sentiment on June 13. These reports could provide important insights into the impact of tariffs and the overall health of the U.S. economy, potentially shaping the near-term direction of the dollar.
Outlook: We maintain a bearish bias on the U.S. dollar. Contributing factors include rising fiscal deficits, unresolved U.S.–EU and U.S.–China trade tensions, potential inflationary effects from tariffs, and broader macroeconomic instability. Until clearer guidance on fiscal and trade policy emerges, the dollar’s status as a global reserve currency will likely remain under pressure.
GBP/USD
The British pound continues to draw support from a combination of resilient UK economic data and favourable trade developments. The UK’s exemption from the U.S. 50% steel and aluminium tariffs—secured through a trade agreement signed in May—has helped maintain investor confidence, even as the existing 25% tariffs remain in place. Additionally, upbeat data releases including GDP, retail sales, and services output, coupled with rising U.S.–China trade tensions, have contributed to positive sentiment surrounding the pound.
Bank of England Governor Andrew Bailey recently commented that he was not surprised by the recent uptick in inflation, but reaffirmed the BoE's commitment to a “gradual and careful” approach to monetary policy. With UK economic indicators holding firm, market expectations now lean toward the BoE holding interest rates steady in the near term, adopting a wait-and-see stance amid ongoing global trade uncertainties.
Meanwhile, the OECD has revised the UK’s growth forecast lower, citing the impact of Trump’s evolving tariff policies and persistent inflationary pressures. UK GDP growth is now projected at 1.3% in 2025, down from 1.4%, and 1.0% in 2026, down from 1.2%.
As of June 8, GBP/USD is trading at 1.35245, after briefly peaking at 1.36150 before paring gains. The Relative Strength Index (RSI) remains above 50, indicating bullish momentum is still in place. Key resistance levels are noted at 1.35456 and 1.35738, while support lies at 1.35160 and 1.34545.
The upcoming week includes key releases such as the Claimant Count Change (June 10) and monthly GDP (June 12), which will offer more clarity on how Trump’s tariff policies are impacting UK economic performance.
Outlook: We maintain a slightly bullish stance on GBP/USD. Recent data suggests a modestly improving economic outlook, and expectations for the BoE to remain on hold lend near-term support to the pound. However, risks remain—rising business costs, lingering uncertainty over U.S. trade policy, and slower growth anticipated in the second half of 2025. Still, ongoing softness in the U.S. dollar, driven by fiscal imbalances and global trade tensions, may help cushion downside risks for sterling in the near term.
USD/JPY
The U.S. Treasury has recently urged Japan to align its monetary policy more closely with its economic fundamentals, encouraging the Bank of Japan (BoJ) to continue policy normalization in an effort to stabilize the yen’s persistent weakness against the U.S. dollar. Despite this external pressure, most economists now expect the BoJ to hold interest rates steady through September, with only a modest probability of a rate hike by year-end. Governor Kazuo Ueda reaffirmed that any rate increases will only occur when the economy is deemed sufficiently resilient.
Meanwhile, the latest 30-year Japanese Government Bond (JGB) auction showed signs of waning investor demand, with the bid-to-cover ratio falling to 2.9, down from 3.1 in the previous month. Despite the drop in demand, yields on the JP30Y declined, suggesting concerns over potential oversupply. This comes amid speculation that the Ministry of Finance (MoF) may reduce long-term bond issuance as the BoJ conducts a policy review during its upcoming meeting on June 16–17. Markets are also eyeing the potential for bond tapering to begin in fiscal year 2026. Ueda has emphasized that BoJ’s bond purchases are strictly aimed at meeting its inflation target and not to finance public debt, reaffirming the central bank’s independence from fiscal policy pressures.
As of June 8, USD/JPY is trading at 144.813, recovering some of its earlier losses. The Relative Strength Index (RSI) is beginning to cross above 50, signaling a potential shift toward bullish momentum. Key resistance levels are observed at 146.032 and 148.155, while support lies at 144.111 and 142.563.
The upcoming week is relatively quiet for the yen, with notable data releases including the M2 Money Stock y/y on June 10 and the BSI Manufacturing Index on June 12. These indicators may provide further insight into domestic liquidity conditions and corporate sentiment.
Outlook: We maintain a bearish bias on USD/JPY, reflecting our view that the yen retains upside potential, particularly if Japanese inflation continues to surprise to the upside. While there are mixed signals from BoJ officials—some hinting at readiness to respond to U.S. tariff-induced inflation with rate hikes, others advocating a cautious, data-dependent approach—the stabilization or increase in Japanese yields could lend support to the yen through safe-haven demand and capital repatriation.
USD/CAD
The Bank of Canada (BoC) held its policy rate steady at 2.75%, citing ongoing trade uncertainty and core inflation remaining elevated at 3.1%. Governor Tiff Macklem emphasized that the central bank is closely monitoring inflation expectations, particularly those influenced by tariff-related price pressures. He also noted that the BoC prefers to gather more clarity on U.S. trade policy developments and their economic impact before making decisions on potential rate cuts. Meanwhile, May’s employment data showed a net gain of 8,800 jobs, surpassing expectations of an 11,900 job decline. The unemployment rate rose to 7.0%, in line with forecasts, while average hourly wages climbed 3.4% year-over-year to $36.14, reinforcing the case for the BoC to maintain its current policy stance. However, there is concern that Q2 economic growth may soften, partly due to inventory accumulation in Q1, as firms advanced exports ahead of anticipated trade risks.
On the energy front, OPEC+ confirmed another output increase of 411,000 barrels per day for July, aimed at regaining market share and penalizing over-producing members. Despite the production hike, oil prices rose, driven by renewed fears of escalation in the Ukraine conflict. Prices remain near $64 per barrel, lending additional support to the Canadian dollar, which is closely tied to oil market performance.
In trade diplomacy, Trump has entered direct discussions with former BoC Governor Mark Carney, as the two sides work toward a potential bilateral agreement. Although details remain scarce, further developments may emerge in the coming weeks, influencing investor sentiment and USD/CAD positioning.
As of June 8, USD/CAD is trading at 1.36880. The Relative Strength Index (RSI) is below 50, signalling a bearish technical bias. Key resistance levels are noted at 1.37000 and 1.38135, while support lies at 1.36445 and 1.36070.
The upcoming week is relatively quiet for Canada, with Manufacturing Sales (m/m) due on June 13 and Housing Starts on June 16, both of which could provide further insight into economic momentum.
Outlook: We maintain a slightly bullish bias on the Canadian dollar in the near term. Strong GDP and inflation figures continue to justify the BoC’s current policy stance, supporting the loonie. Moreover, rising geopolitical tensions, particularly the escalating U.S.–EU trade dispute and renewed conflict risks in Ukraine, are likely to support oil prices and exert downward pressure on the U.S. dollar, reinforcing upside potential for CAD.
Forecasts for the near term
Currency Pair | Jun 30 | Jul 30 |
GBP/USD | 1.36070 | 1.34787 |
USD/JPY | 142.166 | 140.853 |
USD/CAD | 1.36130 | 1.35703 |
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