Today, traders are focused on the Non-Farm Payrolls labor market report

At the end of Wednesday, the Dow Jones Index (US30) fell by 0.02%. The S&P 500 Index (US500) rose by 0.47% and reached a new all-time high. The Nasdaq Technology Index (US100) closed higher by 0.73%. Markets were buoyed by strong gains in technology stocks and news of a trade agreement between the US and Vietnam. President Donald Trump announced on Wednesday that the US would impose 20% tariffs on imports from Vietnam under a new trade deal struck in last-minute negotiations. Previously, Vietnamese goods were to be subject to 46% duties starting next week as part of the « reciprocal » tariff policy introduced by Trump in April. Meanwhile, other major economies, such as the EU and Japan, are still trying to conclude their own agreements with the US.

The latest ADP data showed that private sector employment unexpectedly declined in June, the first decline in more than two years, raising new concerns about the strength of the labor market and supporting the case for monetary policy easing.

Today, important data on the US labor market will be released in the US, namely the Non-Farm Payrolls report. The publication date has been moved up a day due to the US holiday on Friday, July 4 (Independence Day). If the data is in line with analysts’ expectations, such a report will indicate a continuing slowdown in the labor market, but without a sharp deterioration. Higher wage growth rates may alarm the Fed in the context of inflationary pressure, reducing the likelihood of an early easing of monetary policy. The market reaction is neutral for both the US dollar and gold and stocks. A weak labor market report may reinforce expectations of a Fed rate cut in the coming months. We can expect a negative reaction from the US dollar, growth in risk assets (EUR, GBP, AUD), growth in stock indices and gold.

Stock markets in Europe were mostly up on Wednesday. The German DAX (DE40) rose by 0.49%, the French CAC 40 (FR40) closed up 0.99%, the Spanish IBEX35 (ES35) added 0.41%, and the British FTSE 100 (UK100) closed down 0.12%. The Frankfurt DAX Index rose by about 0.5%, interrupting two days of losses, amid growing expectations of a positive outcome to trade negotiations. The US is reportedly insisting on introducing 10% tariffs, while the EU is seeking exemptions for sectors such as alcohol, aircraft manufacturing, pharmaceuticals, and semiconductors. Meanwhile, ECB officials at the Sintra summit expressed growing concern that the strengthening of the euro could affect inflation.

WTI crude oil prices fell below $67 a barrel on Thursday, cutting gains from the previous session, as an increase in US crude oil inventories heightened concerns about weak demand from the main consumer. Official data showed that crude oil inventories rose by 3.85 million barrels last week, defying expectations of a 2 million barrel decline and marking the largest increase in three months. Adding further pressure is the fact that OPEC+ appears set to increase production by 411,000 barrels per day in August, bringing the total increase through 2025 to 1.78 million barrels per day, equivalent to more than 1.5% of global demand.

Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) fell by 0.56%, China’s FTSE China A50 (CHA50) rose by 0.11%, Hong Kong’s Hang Seng (HK50) added 0.62%, and Australia’s ASX 200 (AU200) showed a positive result of 0.66%.

The Bank of Japan should resume raising rates after a temporary pause to assess the impact of US tariffs on the Japanese economy, a BoJ board member said on Thursday. According to Takata, Japan is approaching its 2% inflation target, helped by strong corporate earnings, labor shortages, and wage growth. He also warned that if the Fed resumes cutting rates, it could reduce the Bank of Japan’s policy flexibility. However, Takata sees no signs of a recession in the US.

The Australian dollar fell to $0.657 on Thursday, ending a three-session winning streak amid weak trade data. Australia’s trade surplus narrowed sharply to 2.24 billion Australian dollars in May, well below expectations of 5.09 billion Australian dollars and the revised figure of 4.86 billion Australian dollars in April. This was the smallest surplus in nearly five years, with exports falling to a three-month low due to weaker shipments from the US, which were affected by tariffs. Additional pressure came from data on the PMI index in the services sector of China, Australia’s main trading partner, which fell to a nine-month low and failed to meet expectations.