Markets await US-China trade talk news
Updated Updated Mon, 2025 June 9 09:27
* President Trump gives negotiators room to lift China export controls
* Japan mulls buying back some super-long government bonds
* Apple shares not loving details from the WWDC 2025
* Stocks quiet, dollar off with focus on trade talks
FX: USD had a quiet day as FX volatility levels have started to fall, even with more tariff event risk in early July. US-China trade talks took place today in London. There were media reports that President Trump gave US negotiators leeway to lift tech export controls to China, likely in exchange for Beijing lifting rare earth controls. A handshake agreement is expected. The Fed blackout period has started ahead of next week’s FOMC meeting.
EUR traded around 1.14 as markets look to negotiate a heavy ECB speaker list this week. This came after the modestly more hawkish than expected ECB meeting on Thursday. President Lagarde painted a picture of eurozone growth even in the face of global uncertainty. The market continues to price just one more ECB rate cut, but not until December this year. There may be more focus on German fiscal stimulus when a new budget is released later this month, which should keep the euro supported.
GBP traded an ‘inside day’ but came off the high at 1.3580 made in the European session. There is more UK data this week than we saw last – see below for more details on the job figures today.
USD/JPY is trading around the 50-day SMA at 144.41 as it navigated improved, but contractionary final Q1 GDP. There were reports that the government is considering buying back super-long JGBs at low interest rates. This would work alongside trimming issuance of similar bonds amid the recent jump in yields. Next week sees the BoJ meeting while trade talks are ongoing with Japan’s negotiator said to be planning a visit to the US this week.
AUD led the gainers with NZD topping the intraday chart as both eyed post-recovery highs. Obviously, the latest round of trade talks between the US and China was in focus, while Chinese trade data disappointed due to the trade war. CAD is consolidating just above the 9-month high from last week at 1.3633. Friday’s jobs data was not as weak as expected but the trend in the labour market remains soft, reflecting pressure on the domestic economy from tariff uncertainty.
US stocks: US stocks closed marginally higher after choppy price action. The S&P 500 added 0.09% to settle at 6,006. The Nasdaq closed up 0.17% at 21,798. The Dow Jones finished unchanged at 42,762. Sectors were predominantly green with outperformance in Consumer Discretionary, Materials and Energy, while Utilities, Financials and Consumer Staples lagged. US-China trade talks will resume tomorrow. Apple closed down 1.21% as the WWDC event underwhelmed investors amid few updates on AI. There was much more focus on software and redesign than AI or new products. Apple did unveil liquid glass technology and live language translation. Tesla added 4.55% after its 14.8% drop last week. A comment from President Trump wishing CEO Musk well helped calm tensions between the two. Waymo self-driving cars are in focus in the LA protests. Tesla is about to launch its self-driving taxi service in Austin, Texas this month.
Asian stocks: Futures are mixed. Asian markets were generally higher after Friday gains Stateside. The ASX was closed for a holiday. The Nikkei 225 rose above 38k and the 200-day SMA at 37,889 on upward revisions to GDP figures. The Hang Seng and Shanghai Comp both enjoyed gains though the mainland was capped by data which continued to show deflation and mostly softer trade data.
Gold eventually found a bid after two consecutive days of selling. Our near-term support sits at $3,272 with the 50-day SMA at just below at $3,260.
Day Ahead – UK Jobs data
Ahead of next week’s BoE meeting, UK jobs data is on the radar. Unemployment is forecast to rise one-tenth to 4.6%, though there are still data collection reliability issues. More importantly for the MPC and rate setters, wage growth ex-bonuses are expected to cool to 5.4% from 5.6% and also cool in the coming months. That said, recent stronger than previously assumed public-sector pay deals should boost pay growth more than the MPC expected.
The BoE is still likely to stick to its pace of quarterly rate cuts with real wage growth still decent. There are around 37bps of rate cuts priced in for this year, with the bank fully expected to stand pat next week and four BoE meetings remaining in 2025.
Chart of the Day – Cable rally pauses
Since making a low just below 1.21 in January, GBP/USD hasn’t looked back with five straight months of gains. The series of higher lows and higher highs is a classic bull trend, and the pound has ridden on the coat tails of a stronger euro in recent months. Sterling is a major reserve currency too, and is likely benefitting from de-dollarisation flows too, especially as interest rate differentials are now not supporting GBP. A fresh multi-year top was posted last week at 1.3616. There isn’t any major resistance until around 1.3750. Initial support sits around 1.3434, the late April high.
