Daily Analysis 04/07/2025

• GBP/USD Price: The GBP/USD pair trades steadily above 1.3700, marking its fourth consecutive session of gains during Thursday’s European hours. The pair benefits from continued weakness in the US Dollar and improving UK data.
• UK Services PMI: Final data from S&P Global show the UK June services PMI revised higher to 52.8 from 51.3, with new orders rising for the first time in three months. However, staffing levels declined again, and price inflation slowed to its lowest pace since February 2021, suggesting mixed but resilient sector dynamics.
• BoE's Bailey: Bank of England Governor Andrew Bailey emphasized that interest rates should be reduced gradually, citing signs of easing inflationary pressures. His comments reinforce expectations for a cautious monetary policy path.
• Tariff Threats: US President Donald Trump announced plans to send letters outlining 20%–30% tariffs to 10 countries at a time, beginning Friday. This move could revive trade tensions, potentially supporting safe-haven flows but adding uncertainty to global risk sentiment.
• US Jobs Data: The US June non-farm payrolls rose by 147K, exceeding the 110K forecast, while the unemployment rate fell to 4.1% from an expected 4.3%. This supports a still-robust labor market but may complicate Fed policy outlook.

Closing statement: GBP/USD remains supported above 1.3700, underpinned by upbeat UK data and dovish BoE commentary. However, stronger US jobs data and renewed trade tensions from Trump’s tariff push could introduce volatility in the coming sessions.

• XAU/USD Price: Gold price regains positive traction on Friday, partially reversing losses seen after the stronger-than-expected US jobs report. The rebound highlights persistent investor demand for safe-haven assets despite robust labor market data.
• Technical Outlook: On the daily chart, gold is continuing to edge higher after bouncing strongly off a major upward trendline, suggesting buyers are positioning for a potential push toward new all-time highs.
• Tariff Deadline: Market sentiment remains cautious as the July 9 US tariff deadline approaches, with President Trump threatening to outline new tariffs for countries without finalized trade agreements. This uncertainty supports gold’s appeal as a hedge.
• US Data: US initial jobless claims came in at 233K versus 240K expected, while the May trade balance showed a deficit of -71.5B, slightly wider than forecasts. These mixed figures contribute to a cautious outlook for the US economy.
• Fed Rate Cut: Markets now price in 51 basis points of Fed rate cuts through year-end, down from 63 basis points prior to the jobs data, reflecting tempered expectations for aggressive easing, which could moderate upside in gold.

Closing statement: Gold remains underpinned by technical strength and global uncertainty despite less dovish Fed pricing. Investors will stay focused on tariff developments and upcoming US data to gauge the next directional move.

• Crude Oil Price: West Texas Intermediate (WTI) crude continues its downward trend, trading around $66 per barrel during Friday’s European session. The move reflects sustained selling after recent highs and renewed supply concerns.
• Tax Bill: US President Trump’s tax-cut and spending bill passed Congress, projected to add $3.4 trillion to national debt per the Congressional Budget Office. While not directly tied to oil, the fiscal expansion increases broader market uncertainties and could influence future demand outlook.
• OPEC+ Meeting: OPEC+ is expected to announce a 411,000 barrels per day production increase for August, pushing total 2025 output gains to 1.78 million bpd — over 1.5% of global oil demand. This significant rise in supply has added to downside pressures on crude prices.
• US Sanctions: The US imposed new sanctions targeting Iranian oil smuggling networks and Hezbollah-linked financial channels, potentially constraining illicit oil flows. These measures may offer some support to oil prices despite broader bearish supply signals.
• US Services PMI: US June S&P Global final services PMI came in at 52.9 versus 53.1 preliminary, signaling slightly softer service sector momentum. While not a major market mover for oil, it reinforces a mixed picture for US economic strength.

Closing statement: Crude oil remains under pressure amid rising OPEC+ supply and cautious global sentiment, but US sanctions and fiscal uncertainties could temper further losses. Market attention now turns to the OPEC+ weekend meeting for confirmation of output plans.

• DAX Price: The DAX index rose 0.61% on Thursday, July 3, closing at 23,934 and building on Wednesday’s advance. The rally was fueled by improving risk appetite after a surprising US jobs report and hopes for progress on EU-US trade talks.
• German Services: Germany’s June final services PMI came in at 49.7, slightly above the preliminary reading of 49.4. While still below the 50 threshold, easing declines in new orders and backlogs suggest tentative stabilization in services.
• Factory Orders: German factory orders fell by 1.4% in May, missing expectations and signaling a potential loss of momentum in manufacturing recovery. This contrasts with April’s upwardly revised 1.6% gain, highlighting sector fragility.
• US Tariff Threats: EU trade chief Maros Sefcovic met with US officials to avert steep 50% tariffs set to begin July 9. Current US tariffs already include significant levies on autos, steel, aluminum, and a 10% blanket tariff, posing a key risk for export-driven German industries.
• Fed Commentary: Later in the session, investors await remarks from Federal Reserve speakers, looking for insights on rate path adjustments following the US jobs data. Reactions could influence global risk sentiment and DAX direction into next week.

Closing statement: The DAX remains buoyed by global risk appetite and trade optimism but faces headwinds from weak domestic manufacturing data and looming tariff threats. Investors will watch trade talks and Fed signals for the next catalysts.