It was a busy and eventful long weekend for markets, dominated again by President Trump’s trade policies. On Friday, Trump announced a bold move; imposing a 50% tariff on all EU imports starting June 1st. Currency markets reacted immediately, with GBP/EUR rising above the key 1.19 level and EUR/USD dropping roughly 0.5%.
However, as we’ve come to expect from the Trump playbook, the situation quickly evolved. By Sunday evening, U.S. and EU officials had reportedly engaged in discussions, resulting in a postponement of the proposed tariffs until July 9th. This swift diplomatic action has given markets a reason to switch back to “risk-on” mode, and it’s likely we’ll see Friday’s moves quickly retraced as trading resumes on Monday.
Though we face a shortened trading week due to the late-May holidays, market volatility is unlikely to ease.
Tuesday: EU and U.S. Consumer Confidence
On Tuesday, Eurozone consumer confidence data will be released, forecast at -15.2. While this would mark a slight improvement from the previous reading, the figure remains deeply negative. As a result, the Euro might struggle to find support from this release. Later on Tuesday, we have important U.S. economic indicators, including durable goods orders, which are expected to show improvement, and consumer confidence data, also expected to rise slightly from last month’s reading. Positive U.S. data here could bolster sentiment for the Dollar during Tuesday’s trading session.
Wednesday: FOMC Minutes
The key event on Wednesday will be the release of the minutes from the latest Federal Open Market Committee (FOMC) meeting. Typically, FOMC minutes are a source of market volatility; however, no major surprises are anticipated this time around. Fed Chair Jerome Powell has consistently communicated a cautious approach, expressing hesitation to cut rates amid the current instability from tariff uncertainty and trade tensions. Nevertheless, traders will carefully scan the minutes for any subtle changes in Fed members’ views, potentially influencing the Dollar and broader market sentiment.
Thursday: U.S. Jobless Claims & GDP
Thursday brings a set of U.S. economic data beginning with continuing jobless claims, which have been gradually improving. While declining claims are typically positive, the current environment means these figures may paradoxically weaken the Dollar by increasing expectations of economic weakness and potential policy easing ahead. Following this, the preliminary U.S. GDP estimate will be released, expected to show a contraction of -0.3%. Given recent deterioration in U.S. consumer confidence and ongoing concerns about trade policy, this weaker GDP print should come as no surprise. Still, confirmation of economic contraction could weigh negatively on Dollar sentiment heading into Friday.
Friday: U.S. Trade Balance
The week wraps up on Friday with key U.S. trade balance data, expected to improve slightly to around -$140 billion. The Trump administration is likely to seize upon this improvement as evidence that tariff policies are having their intended effect. Any improvement in the U.S. trade deficit may provide short-term support for the Dollar, although broader market reactions may depend heavily on ongoing trade negotiations and tariff announcements. With another week full of potential twists and turns, staying proactive is essential. As always, feel free to reach out if you need help navigating these volatile FX markets.
GBP/EUR 1.1914 GBP/USD 1.3525 GBP/AED 4.9701
GBP/AUD 2.0970 GBP/CHF 1.1161 GBP/CAD 1.8623
GBP/NZD 2.2687 EUR/USD 1.1337 GBP/ZAR 24.2457