It’s been a subdued start to the week on the economic data front, but markets remain tense ahead of Thursday’s key European Central Bank (ECB) policy announcement.
US Manufacturing Disappoints
The main release of note came from the US, where the ISM Manufacturing Index for May fell short of expectations.
The weaker-than-forecast reading reinforced concerns that the US manufacturing sector remains under sustained pressure – a reflection of broader uncertainty around trade and global demand.
Currency Markets Hold Steady
Despite the soft US data, key currency pairs traded in narrow ranges throughout Monday and into overnight trading.
With no major surprises or shifts in sentiment, traders largely held their positions while awaiting larger market catalysts.
Dollar on the Back Foot
The US dollar remains on the defensive against its major counterparts, weighed down by persistent trade and tariff-related uncertainty.
Investors are growing increasingly cautious as negotiations and global supply chain issues continue to cloud the outlook for the US economy.
All Eyes on ECB Policy Decision
Looking ahead, attention turns to Thursday’s ECB meeting, which is likely to be the week’s defining event.
Markets are widely anticipating a 25 basis point rate cut, with policymakers under pressure to respond to sluggish growth and persistent low inflation across the euro area.
Any surprises in tone or future guidance from the ECB could trigger sharp currency moves, particularly for the euro and its major crosses.
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As central bank decisions and economic pressures shape the currency landscape, it’s crucial to stay ahead of the curve.
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