Collinson FX: June 6: EU cuts rates, Trump talks to Xi on tarriffs
by Collinson FX 6 Jun 12:42 NZST
6 June 2025
NZ Nationals - RS Feva - Murrays Bay - May 11-12, 2025 © Justin Mitchell
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Collinson FX: June 6: Markets up on China rift deal
Trade wars were the market focus, once again overnight, as President Trump held an important phone conversation with Chinese President Xi.
The leaders of the world's two largest economies, agreed to sit down and talk once again and negotiate a final solution to the temporary agreement, forged in Switzerland. This was enough to stabilise market fears and focus once again on economic data.
The ECB cut rates a further 25 basis points, as expected, but signalled rate cuts may be coming to an end.
This was facilitated by the recent fall in EU inflation, tumbling below the target level of 2%, to 1.9%. Western political leaders have found the solution to runaway inflation, that being a deep and extended recession. The EUR consolidated above 1.1400, following the ECB comments, while the GBP pushed above 1.3550.
Collinson FX: June 5: All quiet on the trade front
The softer reserve allowed the AUD to regain 0.6500, while the NZD consolidates above 0.6000. The latest Australian trade data showed a fall in exports, but these numbers have been very volatile, since ‘Liberation Day’. Attention now turns to today’s Non-Farm Payroll number.
The US/European trade negotiations appear to be moving in the right direction and calm has settled over the US/China disruptions, allowing markets to continue to progress. Equities rose and bond yields drifted lower, although emerging economic data was not all good news. US ADP Private sector jobs report, was much softer than expected and that does not bode well for the important Non-Farm Payroll number, set to be released Friday. The US Dollar headed south, with the EUR regaining 1.1400, while the GBP held 1.3500.
Australian GDP growth was weaker than forecast for Q1, rising 0.2% and 1.3% annually. This was not unexpected, as it follows a series of weak economic data, including trade numbers. Australian GDP/Capita has been extremely weak for many quarters now, hiding major problems in the economy, as immigration has boosted GDP and camouflages the economic realities. The weaker reserve allowed the NZD to consolidate above 0.6000, while the AUD looks to regain 0.6500.
Collinson FX: June 4: Markets up on China rift deal
US equity markets posted gains, following news that Trump would speak with Chinese President Xi, in the coming week and a resolution of the recent trade spat, may be at hand.
This follows a contraction in the latest Chinese Manufacturing PMI, and weaker than expected economic data from both Countries. US Factory Orders contracted 3.7%, while the Jolts Jobs report was in line with expectations. European inflation fell below the target range of 2%, to 1.9%, green lighting a further rate cuts, this coming Thursday.
The EUR slipped back to 1.1370, on the news, while the GBP held above 1.3500.
Australian Current Account deficits are coming under the spotlight, with a string of heavy deficits, suggesting pressure on production and growth. The Australian economy has been beset with weak economic data, and this is being reflected in the weaker than expected currency, with the AUD unable to regain 0.6500, while the NZD struggles to hold 0.6000.
Trade remains a key issue, but rumours of a change in the Federal Reserve leadership, may upturn markets.
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