Daily Analysis 06/06/2025

• GBP/USD Price: The GBP/USD pair trades around 1.3500, slightly below its recent peak of 1.3616, the highest level since February 2022, reached on June 5. The recent rally has been fueled by a combination of softer US data and optimism around global trade developments.
• US-China Trade: A call between President Trump and Chinese President Xi Jinping was described as productive, reigniting hopes of progress in tariff negotiations. This has boosted broader market risk appetite, indirectly supporting GBP against the USD.
• UBS economist: According to UBS economist Paul Donovan, Fed Chair Jerome Powell is navigating a complex economic backdrop, marked by uncertainty stemming from trade policy, labor softness, and inflation pressures, which makes policy calibration challenging.
• US Labor Market: Initial Jobless Claims rose to 247,000, exceeding expectations of 235,000, signaling softness in the US labor market. This data added pressure on the USD and reinforced market expectations for a dovish Fed tilt.
• US Jobs Report: The US Nonfarm Payrolls report on Friday is the next major catalyst. Markets expect 130K jobs added in May, with the Unemployment Rate seen holding at 4.2%. A downside surprise could weigh further on the USD and lift GBP/USD.

Closing statement: GBP/USD remains buoyant, underpinned by improved risk sentiment, weaker US labor data, and Fed uncertainty. With Nonfarm Payrolls looming, the pair could extend gains toward recent highs if the US jobs data disappoints expectations.

• XAU/USD Price: XAU/USD regained upward momentum on Friday following a late-session retreat on Thursday. The rebound reflects ongoing investor demand for safe-haven assets amid market volatility and political uncertainty.
• Trump-Musk Rift: Tensions flared between Donald Trump and Elon Musk after Musk publicly opposed Trump’s flagship "One Big Beautiful Bill", calling it an abomination. Their online feud contributed to a 16% plunge in TSLA stock, pressuring broader equity markets and boosting safe-haven flows into gold.
• Fed Officials: A series of recent comments from Federal Reserve officials point to a cautious, data-dependent policy stance, as trade-related uncertainty continues to cloud the economic outlook. This dovish tilt supports non-yielding assets like gold.
• US Trade Deficit: The US Trade Balance showed a dramatic improvement, with the deficit narrowing by 55.5% to $61.6 billion, the lowest since September 2023. While supportive of the USD in theory, this was overshadowed by risk aversion, which buoyed gold prices.
• Gold Buying: According to Metals Focus via Reuters, central banks are expected to purchase 1,000 metric tons of gold in 2025, marking a fourth consecutive year of large-scale acquisitions. This reflects a strategic shift away from US dollar assets, bolstering gold’s long-term outlook.

Closing statement: Gold remains underpinned by risk-off sentiment, central bank demand, and Fed caution. Political tensions and equity market volatility may continue to drive near-term upside, with key US macro data offering the next directional cue.

• Crude Oil Price: West Texas Intermediate (WTI) crude is trading in a tight range around $62.50, holding onto recent gains and poised to break a three-week losing streak. The stability reflects a delicate balance between supply disruptions and demand uncertainty.
• Canadian Wildfires: Wildfires in Canada have shut down approximately 7% of the country’s oil production, tightening North American supply. This unexpected disruption has added upward pressure to oil prices, reinforcing the short-term bullish bias.
• Saudi Arabia Signals: Saudi Arabia plans to raise OPEC+ output by at least 411,000 bpd in August, with possible further hikes in September. Simultaneously, the kingdom slashed July crude prices for Asia to near four-year lows, signaling a price war strategy aimed at defending market share.
• US Crude Inventories: US government data released Thursday showed crude inventories fell roughly 1%, more than analysts expected. This reinforces the tightening supply narrative, especially when coupled with Canadian production outages.
• Global Demand: Despite supply-side support, global demand concerns linger, especially due to mixed manufacturing PMI readings, notably from China. The lack of a clear rebound in global industrial activity poses a risk to sustained oil price strength.

Closing statement: WTI is supported by supply disruptions and falling inventories, but demand-side ambiguity could cap gains. Traders should watch for China’s economic signals and OPEC+ updates in the coming sessions for further direction.

• DAX Price: The DAX gained 0.19% on Thursday, extending Wednesday’s strong 0.77% rise to close at 24,277, after touching a record intraday high of 24,479. The rally was underpinned by investor optimism ahead of key US economic data.
• German Industrial Output: Germany’s industrial sector activity fell more than expected in April, according to the latest data published by Destatis on Friday. In the Eurozone’s economic powerhouse, Industrial Output dropped by 1.4% MoM, the federal statistics authority Destatis said.
• German exports: In April 2025, German exports were down 1.7% and imports were up 3.9% on a calendar and seasonally adjusted basis compared with March 2025.
• Bayer Gains: Bayer shares surged 4.38% following FDA approval of expanded use for its prostate cancer drug, Nubeqa. The rally was further boosted by Goldman Sachs upgrading the stock to Buy, contributing significantly to the DAX’s performance.
• US Jobs Report: The upcoming US Nonfarm Payrolls report is expected to show a slowdown in job creation, with unemployment steady at 4.2% and moderating wage growth. The results could shape global risk sentiment and affect DAX performance through USD and rate expectations.

Closing statement: While the DAX continues to show technical strength and resilience, macroeconomic data from Germany signal fundamental challenges. The index’s near-term path will likely hinge on external cues, particularly from the US labor market and ECB tone going forward.