It’s back to some ‘old fashioned’ data watching this week with the release of the monthly US jobs report. The Independence Day holiday on Friday means we get the non-farm payrolls data actually on Thursday. A relatively solid report is expected though as always, one eye should be on revisions to the headline numbers. Surveys continue to point to a softer labour market going forward, with Fed rate cut expectations ramping up in recent days. Having been stuck in recent weeks around 50bps of cuts in the second half of 2025, with 25bps moves favoured in September and December, money markets are now getting close to a 50% probability of a third 25bps reduction before the year is out. 

That has hit the dollar with fresh multi-year lows, while stock markets have made more record highs on potentially positive trade deal news too. Those trends don’t look like they should change in the near term, even as the three-month tariff deadline comes into play next week. ‘TACO’ is obviously relevant here, so we should probably expect some volatility. The Fed independence theme also certainly does not help the greenback, though any agreement on the spending bill has the capacity to support a dollar comeback after Trump said he hopes to see something ahead of July 4.

By helping weaken USD, lower US rates have also pushed the euro stronger, weighing down on the eurozone’s inflation outlook. Rate setters at the ECB are well aware of the disinflationary impact a stronger euro has on its macroeconomic projections. An appreciating single currency both cheapens imports and can act as a growth headwind through exports. Softer oil prices also mean downside risks seem to dominate the inflation outlook at the moment, with Tuesday’s latest eurozone price data on the radar.

In Brief: major data releases of the week

Tuesday, 1 July 2025

– Eurozone CPI: Consensus sees the headline unchanged at 1.9% and core one-tenth lower at 2.3%. Higher energy and goods prices should be offset by easing services and food inflation. The stronger euro also typically has a disinflationary impact.

– US ISM Manufacturing: June manufacturing activity is expected to pick up to 48.8 from 48.5, as seen in regional surveys. The front-running of purchases ahead of tariffs could still factor. That also may mean elevated price pressures and ongoing inflation risks.

Thursday, 3 July 2025

– US Non-Farm Payrolls: This data is released on Thursday due to the US Independence Day holiday. Consensus sees 130k jobs added, just below the three-month average of 135k and the prior 139k. The unemployment rate is predicted to tick up one-tenth to 4.3%. Wage growth is seen down one-tenth at 0.3% m/m.

– US ISM Services: June non-manufacturing ISM is forecast to rise back into expansion territory at 50.3 after its brief dip below to 49.9. Services activity had remained in above 50 since July 2024. New orders and the prices components will be in focus due to uncertainty over tariffs and the economy.