Euro Area Economic Sentiment Indicator Falls to 94 in June 2025
The Economic Sentiment Indicator (ESI) for the Euro Area dropped to 94 in June 2025, down from 94.8 in May and well below market expectations of 95.1, according to the latest data from the European Commission.
đ Key Drivers of the Decline
The drop in sentiment was largely driven by the industrial sector, where confidence slipped to -12 from -10.4 in the previous month. The decline reflects:
Lower order book assessments
Higher stocks of finished products
Weaker production expectations
Additional declines were observed in:
Retail confidence: -7.5 (vs -7.2 in May)
Consumer confidence: -15.3 (vs -15.1)
đ Sectors Showing Improvement
Despite the overall downturn, two sectors posted gains:
Services: Confidence improved to 2.9 (from 1.8)
Construction: Rebounded slightly to -2.8 (from -3.5)
đ Country-Level Highlights
Biggest Declines:
France: 89.6 (down from 93)
Spain: 102 (down from 103.4)
Germany: 90.7 (down from 91.5)
Stable or Improving:
Poland: 101.4 (up from 100.4)
Italy: 98.9 (vs 98.7)
Netherlands: 97.1 (vs 96.9)
đ What It Means for the Eurozone
The data suggest ongoing economic weakness across the Eurozone, particularly in manufacturing and retail sectors. While services and construction offer some support, the overall picture points to fragile business and consumer confidence as the region navigates 2025.
This divergence between countriesâparticularly the downturn in France and Germanyâhighlights uneven recovery dynamics within the EU bloc. source: European Commission
Stay tuned for more updates on EU economic indicators and what they mean for markets and policy.
WTI crude oil, gold prices, and the US dollar index all moved significantly on Thursday as geopolitical developments, Fed policy signals, and economic data shaped market sentiment.
Crude Oil Prices Rise Ahead of USâIran Talks and OPEC+ Meeting
WTI crude oil futures climbed above $65 per barrel on Thursday, building on recent gains and recovering from earlier losses in the week. The rally comes as investors await high-stakes talks between the US and Iran scheduled for next week. These discussions aim to reduce tensions in the Middle East and limit Tehranâs nuclear ambitions.
The move follows President Trump’s reaffirmation of the maximum pressure campaign, including restrictions on Iranian oil exports. However, he also hinted at possible enforcement leniency to support Iranâs reconstruction, suggesting China may continue importing Iranian crude.
In a sign of strong demand, US crude inventories dropped by 5.8 million barrels, reaching an 11-year seasonal low. Cushing stockpiles also fell to the lowest since February.
Markets are now turning their focus to the upcoming OPEC+ meeting on July 6, where the group will set its production policy for August. Russia may support a supply increase if conditions warrant it.
Gold Prices Edge Higher on Weaker Dollar, Geopolitical Relief
Gold prices rose toward $3,340 per ounce, extending gains from the previous session. The weaker US dollar and falling Treasury yields provided support, while easing geopolitical tensions added a further boost.
Next weekâs USâIran talks have sparked cautious optimism in markets. While the ceasefire between Iran and Israel is holding, concerns about its durability remain.
Meanwhile, Fed Chair Jerome Powell, in his second day of testimony, maintained a balanced stanceâacknowledging inflation risks from tariffs but holding off on immediate rate cuts. Nonetheless, weak consumer confidence in June raised fresh concerns about the labor market and trade uncertainty, potentially strengthening the case for future easing.
Markets are now closely watching key data, including Thursdayâs final Q1 GDP reading and initial jobless claims, followed by PCE price data on Friday.
US Dollar Slides to Three-Year Low Amid Rate Cut Expectations
The US dollar index fell to around 97.5, marking its lowest level in over three years. The decline reflects a mix of easing geopolitical tensions, growing fiscal worries, and expectations of Federal Reserve rate cuts.
With the ceasefire between Iran and Israel seemingly stable and USâIran negotiations on the horizon, risk sentiment improved. On the policy front, Chair Powell reiterated a cautious stance, stating that while tariffs may drive inflation, the Fed would likely continue easing absent those pressures.
Traders are now pricing in over 60 basis points of rate cuts by year-end, with the next move anticipated in September. Attention is also turning to US trade negotiations ahead of President Trump’s July 9 deadline, and efforts in Congress to finalize a tax and spending package around the same period.
Looking Ahead
Markets are poised for more volatility as geopolitical, economic, and policy developments continue to unfold. Investors should watch closely for:
USâIran nuclear talks next week
July 6 OPEC+ meeting outcomes
Upcoming US economic data (GDP, jobless claims, PCE)
Fed policy signals amid global trade uncertainty
Stay tuned for further updates as these stories evolve.
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Stay informed with todayâs key macroeconomic and market highlights from the U.S., Japan, Germany, and global equity markets.
đşđ¸ U.S. Manufacturing Remains in Contraction
The Philadelphia Fed Manufacturing Index held steady at -4.0 in June 2025, unchanged from May and below market expectations of -1. This marks another month of subdued regional manufacturing activity.
Key Highlights:
New orders stayed positive but weakened.
Shipments improved and turned positive.
Employment fell sharply, reaching its lowest level since May 2020, signaling a drop in factory jobs.
Price pressures eased slightly but remain historically high.
Outlook: Business optimism is waning, with fewer firms expecting growth in the next six months.
đ Takeaway: Continued weakness in manufacturing could influence the Fedâs policy stance going forward.
đŻđľ Japan Inflation Eases, Core CPI Surges
Japanâs annual inflation rate fell slightly to 3.5% in May 2025, down from 3.6% in the previous two months. However, core inflation (excluding fresh food and energy) rose to 3.7%, the highest in over two years.
Breakdown:
Declines in prices for clothing, healthcare, and household goods.
Housing, recreation, and communications saw rising costs.
Rice prices skyrocketed over 100% year-over-year, showing limited impact from government price controls.
đ Takeaway: Inflation remains a concern ahead of Japan’s summer elections, adding complexity to BoJ policy decisions.
đŠđŞ German Producer Prices Drop Sharply
Germanyâs Producer Price Index (PPI) fell 1.2% year-over-year in May 2025, marking the third straight month of decline and the sharpest drop since September 2024.
Details:
Energy prices fell sharply:
Electricity: -8.1%
Natural gas: -7.1%
Heating oil: -10.2%
Excluding energy, producer prices rose 1.3% YoY.
Monthly PPI dropped 0.2%, better than the expected 0.3% decline.
đ Takeaway: Cooling input prices support the ECBâs disinflation narrative but wonât remove all pressure from sticky core inflation.
đ U.S. Markets Set for a Lower Open
After Wednesdayâs Juneteenth holiday, U.S. stock futures point to a slightly lower open as investors react to:
Ongoing geopolitical tensions in the Middle East.
President Trumpâs delayed decision on Iran, while strikes from Israel continue.
Oil prices retreat, weighing on energy stocks.
CarMax expected to open 10%+ higher after strong earnings.
Triple Witching Day could increase market volatility.
đ Takeaway: Risk appetite remains fragile. Expect choppy trading as geopolitical uncertainty and technical factors weigh on sentiment.
đ Final Thoughts
Economic data continues to paint a mixed global pictureâslowing growth, sticky inflation, and rising geopolitical risks. Investors should brace for near-term volatility and monitor central bank signals closely.
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European equity markets were set to open lower on Wednesday as investors digested rising geopolitical tensions and awaited the U.S. Federal Reserve’s interest rate decision.
Euro Stoxx 50 futures slipped 0.3%
Stoxx 600 futures edged down 0.2%
Sentiment was hit by comments from U.S. President Donald Trump, who demanded Iranâs âunconditional surrenderâ and threatened to strike Supreme Leader Khamenei, further escalating tensions in the Middle East.
Investors are also eyeing:
UK inflation data
Swedenâs Riksbank policy decision
Both could influence European interest rate expectations.
Japanâs exports fell 1.7% year-on-year in May 2025 to a four-month low of JPY 8.13 trillion, reversing a 2% gain in April. This marked the first decline since September 2024.
Shipments to the U.S.: â 11.1%
Exports to China: â 8.8%
Increases: EU (+4.9%), Russia (+5.2%), ASEAN (+0.1%)
Trade War Impact
The decline came as U.S. tariffs bite, especially on autos, auto parts, and chip machinery. Japan is seeking exemption from 25% U.S. auto tariffs, while Trump has doubled duties on steel and aluminum to 50%. A 24% retaliatory tariff from Japan is scheduled for July 9, unless a deal is reached.
đŞ Gold Slips as Dollar Gains, But Central Banks Remain Bullish
Gold prices edged lower to around $3,380/oz on Wednesday. A stronger U.S. dollar weighed on prices, even as Middle East tensions drove safe-haven demand.
Key Drivers:
Israel conducted strikes near Tehran
Iran launched missiles in retaliation
Trump held a national security meeting, sparking fears of U.S. military involvement
Meanwhile, a World Gold Council survey revealed:
95% of central banks expect global gold reserves to rise
43% plan to increase their own holdings â a record high
đľ U.S. Dollar Eases After Tuesday Surge
The U.S. Dollar Index (DXY) dipped slightly to 98.6 after a near 1% gain on Tuesday, driven by safe-haven flows due to the Israel-Iran conflict.
What to Watch:
Federal Reserve is expected to hold rates steady
Market focus is on forward guidance
Upcoming U.S. data: housing starts and jobless claims
Despite weaker retail sales in May, consumer spending remains resilient, underpinned by strong wage growth.
đ Takeaway
Global markets remain on edge as geopolitical risks, trade tensions, and monetary policy uncertainty collide. Investors are bracing for potential volatility spikes driven by:
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Suggested Cash/FX Allocation
High-frequency trading
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Swing trader
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CFD/multi-asset trading
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Age and risk appetite affect how much cash you should hold.
Age Group
Suggested Cash Allocation
Under 40
5% â 10%
40â60
10% â 20%
60+
20% â 40%
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When to Increase Your Cash/FX Position
Anticipating a market downturn or recession
Planning for a large purchase or investment
Experiencing high portfolio volatility
Preparing to rebalance or rotate assets
Rule of Thumb
“Keep enough in cash and FX to sleep well at night, but not so much that inflation eats it away.”
Final Thoughts
Your ideal cash or FX allocation depends on your goals, timeline, and risk tolerance. Revisit it regularly, especially in changing market conditions. Liquidity is powerâbut too much can be a drag on growth.
In a surprising turn, the latest US job data suggest that the labour market is more resilient than analysts had projected. According to the recent payroll data, US nonfarm employment increased by 139,000 jobs in May, slightly lower than Aprilâs revised figure of 147,000 but higher than the consensus estimate of 130,000.
This unexpected uptick challenges earlier concerns of a sharper slowdown, amid fears of new tariffs and broader economic headwinds. While the pace of job creation has softened, the labour market continues to send mixed signals that demand a closer look.
Key Highlights:
May Job Growth: +139K (vs. 130K expected)
April Revisions: Downwardly adjusted to +147K
Unemployment Rate: Steady at 4.2%
Sector-Specific Trends
Employment growth wasnât evenly distributed. Some industries fared better than others:
Healthcare, leisure and hospitality, and social assistance showed steady gains, signaling continued demand for services and care-related roles.
Manufacturing and federal government jobs experienced a declineâpotential early signs of budget tightening or shifting production dynamics due to supply chain constraints and tariff concerns.
This pattern reinforces the notion that while the US job engine is still running, itâs shifting gears.
What This Means for Workers
For job seekers, the positive news is that the unemployment rate remains stable, and key service sectors continue to hire. However, those in more cyclical or government-tied industries may want to stay alert to shifting priorities and potential policy changes.
Implications for Markets and Policy
Wall Street had braced for a sharper pullback in hiring, so this report could bring temporary relief. Still, policymakers at the Federal Reserve will likely keep a close eye on wage trends and broader economic indicators before making any interest rate adjustments.
If the economy continues to tread this fine lineâneither overheating nor collapsingâit may lend weight to the case for a “soft landing” scenario, which economists have debated for months.
Final Thoughts US Jobs Data
Mayâs job data serves as a reminder that economic momentum doesnât vanish overnightâit tapers, recalibrates, and shifts. For businesses and workers alike, staying flexible and responsive to these trends will be crucial in the coming months.
Stay tuned to Swap Hunter for regular updates on the economy, job market trends, and how these shifts impact your career, investments, and day-to-day decisions.
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S&P 500 Past 10 Years
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