ECB Interest Rates, U.S. Jobless Claims, U.S. Trade Balance

The EUR/USD pair advanced on Wednesday, climbing 0.60% as the US dollar weakened in response to disappointing economic data.

The greenback’s retreat followed weaker-than-expected data releases, which raised concerns about the strength of the US economy. The Institute for Supply Management (ISM) reported a slowdown in services sector activity, while ADP’s private payroll data showed hiring in May fell short of expectations—potentially signaling a subdued Nonfarm Payrolls report on Friday.

Market sentiment was further shaken late Tuesday when US President Donald Trump signed an executive order doubling tariffs on steel and aluminum—from 25% to 50%—for most countries, excluding the UK, which retains the 25% rate. Attention now turns to a scheduled call later this week between President Trump and Chinese President Xi Jinping, as trade tensions remain front and center.

In the Eurozone, data from the HCOB Services and Composite Purchasing Managers’ Indexes (PMIs) delivered mixed signals. While some indicators pointed to modest expansion, most remained in contraction territory. Combined with last week’s softer inflation data, this could reinforce expectations that the European Central Bank (ECB) will cut rates by 25 basis points at its June 5 policy meeting.

Looking ahead, the EU economic calendar will feature producer price inflation data, the ECB’s official rate decision, and a press conference from ECB President Christine Lagarde. In the US, markets will monitor weekly Initial Jobless Claims and a series of scheduled speeches by Federal Reserve officials for further policy guidance.

Bitcoin edged lower on Wednesday, remaining confined to a narrow trading range as risk appetite for cryptocurrencies weakened amid ongoing concerns over U.S. trade policy and softening economic indicators.

Increased profit-taking has also applied consistent downward pressure in recent sessions.

The broader crypto market mirrored Bitcoin’s lackluster performance, failing to capitalize on recent strength in U.S. technology stocks—typically a bellwether for digital assets. Despite ongoing optimism in equity markets, cryptocurrencies remained subdued.

Notably, markets showed little reaction to news that Trump Media & Technology Group Corp is advancing efforts to launch a spot Bitcoin exchange-traded fund. The announcement did little to lift sentiment, as macroeconomic concerns continued to dominate.

Investor caution was further amplified by uncertainty surrounding U.S. trade policy and a lack of clarity on a potential call between President Donald Trump and Chinese President Xi Jinping.

While cryptocurrencies are not directly tied to trade tariffs or economic slowdowns, their speculative nature makes them particularly vulnerable to shifts in market sentiment.

Oil prices retreated on Wednesday, closing almost 1% lower as a larger-than-expected build in U.S. gasoline and distillate inventories raised fresh concerns about fuel oversupply. The bearish inventory data, combined with rising OPEC+ output and escalating global trade tensions, added to growing uncertainty over near-term energy demand.

According to the U.S. Energy Information Administration (EIA), gasoline inventories surged by 5.2 million barrels last week—well above analyst expectations for a 600,000-barrel increase. Distillate stocks also climbed sharply, rising by 4.2 million barrels compared with a forecasted 1-million-barrel gain.

In contrast, crude oil inventories fell by 4.3 million barrels, far exceeding expectations for a 1-million-barrel draw, as refiners ramped up demand for crude in the post-Memorial Day period.

Adding to the market’s volatility, Russia reported a 35% year-on-year drop in oil and gas revenue for May. The revenue decline may push Moscow to resist further OPEC+ output hikes, as low prices strain government budgets.

On the geopolitical front, tensions escalated as U.S. President Donald Trump and Chinese President Xi Jinping were expected to hold a call later this week. This follows renewed friction over trade agreements and tariff policy.

U.S. equities closed mixed on Wednesday as weaker-than-expected labor market data amplified concerns over the health of the economy, while investors remained cautious ahead of a potential call between President Donald Trump and Chinese President Xi Jinping amid escalating trade tensions.

Private sector employment in the U.S. rose by just 37,000 jobs in May, according to ADP data released earlier in the day—well below expectations and a significant slowdown from April’s downwardly revised 60,000 increase.

Reacting to the ADP report, former President Trump renewed his criticism of Federal Reserve Chairman Jerome Powell, calling for immediate rate cuts.

Markets remain fixated on trade headlines, with investors awaiting the outcome of a deadline for U.S. trade partners to submit final offers to avoid steep new tariffs. Thus far, only the United Kingdom has reached a preliminary agreement during Trump’s 90-day tariff pause.

In corporate news, CrowdStrike shares fell sharply after the cybersecurity firm issued revenue guidance for the current quarter that came in below analyst forecasts, overshadowing stronger-than-expected earnings for the fiscal first quarter.

Meanwhile, Tesla Inc. dropped more than 3% after data showed U.S. sales declined 11% in May, continuing a broader trend of weakening demand in both domestic and European markets.