Good morning traders from a warm, mostly cloudy IntelliTrade desk, with Amsterdam near 21°C and patches of sun between clouds, so take a slow coffee and settle in for the week-ahead map.
Overall Market Sentiment:
Market sentiment starts the week cautiously constructive, but not relaxed. Oil has fallen sharply on hopes of a U.S.-Iran ceasefire extension and possible Strait of Hormuz reopening, while equities remain near record highs and the dollar has slipped from its strongest levels.
The regime is selective risk recovery. Lower oil helps inflation expectations, but U.S. PCE stayed hot, China’s factory PMI has stalled at 50, and this week’s U.S. jobs and ISM data can quickly bring yields back into focus.
Weekly Thesis:
The dominant question this week is whether softer oil can keep the relief trade alive while U.S. jobs and ISM data test the Fed’s inflation problem. The base case is that the dollar keeps a yield-supported floor, but its upside is less clean if oil continues to fall and equities stay firm. Our house view is that FX remains range-sensitive, with USD supported by inflation risk, AUD and NZD dependent on China and risk appetite, CAD hurt by weak domestic growth, and JPY still shaped by intervention risk.
Scenario Map:
- Base case, 55%: Oil holds near the low-$90s Brent area, U.S. jobs slow but do not break, and ISM data show sticky but manageable price pressure. USD stays supported but capped, equities remain resilient, and high-beta FX trades selectively.
- Risk-on relief scenario, 25%: Oil falls further, U.S. labor data cools without a recession scare, and China data stabilizes. AUD, NZD, EUR, GBP, and equities would likely benefit, while USD, CHF, and gold defensive demand could fade.
- Inflation-risk scenario, 20%: Jobs or wages surprise stronger, ISM prices stay firm, or oil rebounds on renewed Middle East uncertainty. USD, CHF, JPY, and gold would likely attract more attention, while high-beta FX and rate-sensitive equities could struggle.
What Changed Since Last Week:
Oil relief changed the macro tone, with Brent falling toward the $91 to $92 area on May 29 after being much higher earlier in the month. The dollar lost some momentum, with DXY near 98.97 on May 29, but it still strengthened over the month. The biggest new problem is Canada, where Q1 GDP unexpectedly contracted and pushed the economy into a technical recession.
Geopolitics:
Geopolitics remains central because oil is still the fastest channel from headlines into inflation expectations. Brent near $91 is far below the recent stress zone, but energy flows are not fully normalized and analysts still expect a long recovery in exports after the Iran war disruption.
This matters for FX because lower oil helps energy importers and risk appetite, while any setback can quickly support USD, CHF, JPY, gold, and oil-linked CAD. Assumption: the main market channel this week remains energy supply and inflation expectations, not a broader credit shock.
Macro Calendar:
The week ahead
- U.S. jobs week: Nonfarm payrolls, unemployment, wages, ADP, JOLTS, and jobless claims will shape the next move in Fed pricing, yields, USD, gold, and equities. May payrolls are expected to rise around 85,000, with unemployment near 4.3%.
- ISM manufacturing and services: These reports matter because markets need to know whether higher energy costs are still feeding into input prices while growth slows.
- Eurozone CPI: Inflation data will guide EUR because markets are already watching whether the ECB needs to respond more firmly to second-round price pressure.
- Australia GDP and trade data: AUD needs confirmation that domestic demand and exports can hold up while China’s factory momentum stalls.
- China follow-through: China’s official manufacturing PMI fell to 50 in May, so markets will watch whether policy support, exports, and high-tech manufacturing can offset weak domestic demand.
🔺 USD - Dollar supported, but jobs must confirm the story
The dollar starts the week with a mild strength tilt after DXY ended near 98.97 on May 29 and still gained over the past month. Fed expectations remain the main driver because April PCE inflation rose to 3.8% year-on-year, with core PCE at 3.3%. The curve matters because front-end yield strength would support USD more clearly than safe-haven demand alone. Jobs, wages, and ISM prices can either confirm the sticky-inflation story or soften it if labor cooling becomes more obvious. The current bias would weaken if oil keeps falling, payrolls slow, and yields ease without damaging equity sentiment.
⚖️ EUR - Euro stabilizes, but ECB inflation risk remains
EURUSD ended near 1.1654 on May 29, keeping 1.16 and 1.17 as the main reference areas markets watch. The euro is helped by lower oil because the euro area is sensitive to imported energy costs, but it still faces a complicated inflation-growth balance. Germany’s May inflation cooled to 2.6%, while core inflation stayed at 2.5% and services inflation rose to 3.1%. Eurozone CPI this week can decide whether EUR trades more on ECB caution or softer energy relief. Risks are mixed, with EUR needing softer U.S. yields or firmer euro area data to build a clearer positive tilt.
⚖️ GBP - Sterling steadier, but local conviction is limited
GBPUSD ended near 1.3437 on May 29, leaving 1.33 and 1.35 as the main zones markets watch. Sterling is still tied to the UK wage and inflation debate, but softer headline inflation has reduced some pressure on the BoE. Lower oil helps the household story, while weak growth and political uncertainty keep GBP from trading as a clean rate-support currency. This week, GBP may be driven more by global USD direction than by local data. Risks are mixed unless U.S. jobs or yields create a stronger dollar impulse.
🔻 CAD - Recession risk weakens the oil cushion
CAD risks lean weaker after Canada unexpectedly entered a technical recession, with Q1 GDP contracting 0.1% annualized after a revised 1% decline in Q4. USDCAD traded near 1.3790 on May 29, with the loonie pressured even as oil remains high by pre-war standards. Brent near $91 still offers some terms-of-trade support, but weaker domestic growth reduces the case for a more aggressive BoC path. The 1.36 to 1.39 USDCAD area is the main reference zone markets watch.
⚖️ CHF - Defensive role cools as oil stress eases
CHF risks are mixed as lower oil and stronger equities reduce the urgency of safe-haven demand. USDCHF remains mainly tied to dollar direction and global yields because the SNB story is quieter this week. If oil headlines improve and risk appetite broadens, CHF demand may cool further. If energy talks break down or yields move disorderly, the franc can regain defensive support.
⚖️ JPY - Yen remains close to intervention-sensitive territory
USDJPY ended near 159.26 on May 29, still close to the 160 area markets continue to treat as sensitive. Japan confirmed it spent about $73.5 billion supporting the yen between late April and late May, which keeps intervention risk central. Lower oil helps Japan as an energy importer, but the U.S.-Japan yield gap remains a major headwind. If U.S. jobs data lifts yields, JPY pressure can return quickly, while softer yields would help the currency stabilize.
⚖️ AUD - Aussie needs China and GDP support
AUDUSD ended near 0.7187 on May 29, with 0.71 and 0.72 as the main reference zones markets watch. AUD has a mixed tilt because lower oil and stronger equities help risk appetite, while China’s factory PMI at 50 keeps the regional growth story fragile. Australia GDP and trade data this week can decide whether AUD behaves more like a domestic rates currency or a China-sensitive risk proxy. Risks are balanced unless China data improves or U.S. yields rise again.
🔺 NZD - Kiwi supported by RBNZ expectations
NZDUSD ended near 0.5982 on May 29, after strengthening over the month and moving close to the 0.60 area markets watch. The kiwi has a firmer rate-support angle after the RBNZ signaled that hikes could come sooner than previously expected. The challenge is that weak China demand and high U.S. yields can still limit upside. Risks lean mildly stronger while the RBNZ message stays firm and global risk sentiment holds.
Cross-Asset Wrap:
- 🪙 Gold: Gold is near $4,541 per ounce, higher on May 29 but still below earlier May protection highs and down over the past month. USD and real yields remain the first drivers, while geopolitics keeps some defensive premium in place. Watch next: U.S. jobs and ISM data will decide whether gold trades more on yield pressure or softer-dollar relief. [USD] [REAL YIELDS] [RISK]
- 🥈 Silver: Silver is near the mid-$70s per ounce area, broadly tracking gold but still more sensitive to industrial and China-linked demand. USD, yields, and global manufacturing signals are the main drivers. Watch next: weak China follow-through would make silver behave more like an industrial metal than a pure precious-metal hedge. [USD] [YIELDS] [INDUSTRIAL]
- 🛢 Oil, Brent: Brent is near $91 per barrel, down sharply from earlier stress levels and around 17% lower over the past month. Supply expectations, U.S.-Iran diplomacy, and the pace of energy-flow recovery are the main drivers. Watch next: further ceasefire progress would cool inflation fears, while shipping setbacks would rebuild the risk premium. [SUPPLY] [DEMAND] [GEOPOLITICS]
- 📈 Stocks: The US500 is near 7,580, just below its May record area near 7,599 after gaining 0.22% on May 29. Tech and AI momentum are supporting equities, while jobs data, yields, and oil remain the main macro tests. Watch next: softer labor data could help the rally broaden, while a hot wages print could make equities more rate-sensitive. [TECH] [EARNINGS] [RISK]
- ₿ Crypto: Bitcoin is near $73,835, trading between roughly $73,416 and $74,143 today. Liquidity, real yields, and risk appetite remain the main drivers, with lower oil helping the macro tone but sticky U.S. inflation still limiting enthusiasm. Watch next: crypto sentiment will likely follow the next move in USD liquidity after this week’s jobs and ISM data. [LIQUIDITY] [YIELDS] [RISK]
This is general, educational macro and FX commentary. It is not investment advice and not a trading signal.
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