Eurozone Inflation Hits 2%, U.S. Factory Growth at 3-Year High, Jobs Beat Forecasts

Here’s your latest economic snapshot:

• Eurozone inflation edged up to 2.0%
• S&P Global US Manufacturing PMI climbed to 52.9 
• U.S. nonfarm payrolls rose by 147K

Market Recap:

Eurozone Consumer Price Index (CPI) YoY: Eurozone inflation edged up to 2.0% in June 2025 from 1.9% in May, matching forecasts and hitting the ECB’s official target. While Germany saw a surprise dip in inflation, France and Spain posted small increases, and Italy remained stable. Services inflation rose slightly to 3.3%, while the drop in energy prices slowed to 2.7%. On the other hand, inflation for non-energy industrial goods and food eased slightly. Core inflation (excluding energy and food) stayed at 2.3%, its lowest level since January 2022.

U.S. Manufacturing Purchasing Managers Index (PMI): The S&P Global US Manufacturing PMI climbed to 52.9 in June 2025, up from 52 in May and surpassing both the flash estimate and expectations. This marks the strongest factory growth in over three years. Output increased for the first time in four months, driven by a rise in new and export orders despite ongoing tariffs. Hiring picked up at the fastest pace since September 2022. However, input and output prices saw their sharpest rise in nearly three years. Business confidence for future sales also hit a four-month high.

U.S. Nonfarm Payrolls: U.S. nonfarm payrolls rose by 147K in June 2025, beating forecasts of 110K and slightly above the 12-month average of 146K. Gains were driven by state and local government hiring—especially in education—while the federal workforce shrank by 7K. Healthcare added 39K jobs, led by hospitals and care facilities, and social assistance rose by 19K. The report confirms the labor market remains solid, though rising uncertainty around tariffs and trade may cool hiring in the months ahead.

Oil and Commodities:

Brent Crude: Oil futures dipped to $68.30 in quiet holiday trading on Friday, with markets eyeing the upcoming OPEC+ meeting and a potential decision to increase production.

Gold: Gold climbed to $3337 on Friday, set for a weekly gain as a weaker dollar and looming Trump trade deadlines boosted safe-haven demand.

Currency Watch:

EUR/USD: The euro rose to $1.17826 due to the U.S. Independence Day holiday and market closure.

GBP/USD: Sterling hovered near $1.3634 on Friday, set for a weekly loss as fiscal and political uncertainty dampened demand for UK assets.

USD/JPY:  The pair rose ro 145.025.

Bitcoin $107631. Ethereum $2532

Preview of the Upcoming Week:

July 08, 2025

Australia Interest Rate Decision: Australia’s key interest rate currently stands at 3.85%, but analysts expect it to decline to 3.60% by the end of this quarter. Long-term projections suggest a further drop to around 2.85% by 2026, signaling a gradual easing cycle.

📌 What to Watch:

A potential rate cut could pressure the Australian dollar (AUD), especially against stronger currencies like the USD, JPY, and CHF. Pairs like AUD/USD, AUD/JPY, and AUD/CHF may see increased volatility.

Also, watch gold prices, as AUD tends to correlate with commodity trends, and lower rates could fuel a risk-on sentiment in metals and equities.

July 09, 2025

New Zealand Interest Rate Decision: New Zealand’s benchmark interest rate is currently 3.25% and is expected to drop to 3.00% by the end of this quarter. However, long-term forecasts suggest a rebound, with rates projected to rise to 3.25% in 2026 and 4.00% by 2027, indicating a tightening trend in the years ahead.

📌 What to Watch:

Short-term rate cuts may weigh on the New Zealand dollar (NZD), especially against currencies with hawkish outlooks like the USD, EUR, or JPY. Keep an eye on NZD/USD, EUR/NZD, and NZD/JPY.

In commodities, dairy prices and risk-sensitive assets could also react to changes in RBNZ policy expectations.

U.S. Federal Open Market Committee (FOMC) Meeting Minutes: The FOMC Meeting Minutes offer a detailed summary of the Federal Reserve’s most recent policy discussion. These minutes provide insights into the views of policymakers on inflation, economic growth, employment, and interest rates. While the Fed may not always signal immediate changes, the tone and language used often shape market expectations for future rate moves.

📌 What to Watch For:

Rate Cut Clues: Any mention of slowing inflation or concerns about economic softening may strengthen the case for rate cuts later this year.

Inflation Outlook: Look for signs the Fed believes inflation is sustainably moving toward its 2% target.

Labor Market Commentary: Observations about hiring trends or wage growth may impact expectations on how long rates will stay elevated.

Balance Sheet and Liquidity: Hints about quantitative tightening or adjustments to liquidity provisions could impact bonds and equity markets.

💡 Market Impact:

A dovish tone may weaken the U.S. dollar and boost stocks, gold, and Treasuries.

A hawkish stance could trigger a stronger USD and weigh on risk assets like emerging markets and high-yield currencies.

Gold, NASDAQ, and S&P 500 often react sharply to unexpected shifts in Fed tone.

Watch USD/JPY, EUR/USD, and 10-year Treasury yields for immediate reactions.

July 10, 2025

U.S. Initial Jobless Claims: Initial jobless claims in the U.S. fell to 233K in the week ending June 28, down from 237K the previous week, indicating slight improvement in labor market conditions. However, analysts still expect claims to rise to 265K by the end of this quarter as economic uncertainty and corporate caution persist. In the longer term, filings are projected to stabilize around 210K in 2026 and 190K by 2027.

📌 What to watch: Keep an eye on USD, equities, and Treasury yields, as labor data influences expectations for Fed policy. Stronger-than-expected jobless claims figures tend to support the dollar, while a rise in claims could push investors toward safe-haven assets like gold and bonds.

July 11, 2025

U.K. Gross Domestic Product (GDP) MoM: UK monthly GDP shrank by 0.3% in April 2025, reversing a 0.2% gain in March and signaling a short-term dip in economic momentum. However, growth is expected to rebound to 0.2% by the end of the quarter. In the longer term, the UK’s monthly GDP is projected to trend around 0.4% in 2026 and 0.3% in 2027.

📌 What to watch: Weak growth may weigh on GBP pairs like GBP/USD and EUR/GBP, while sectors sensitive to domestic demand—such as UK equities and real estate stocks—may show volatility. Investors will also be closely watching the Bank of England’s tone in upcoming meetings.

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