ECB cut interest rates by 25 basis points, analysis of short-term trends of spot gold, silver, crude oil and foreign exchange on June 5

Global Market Review

1. European and American market conditions

The three major U.S. stock index futures rose and fell mixed, Dow futures rose 0.03%, S&P 500 futures rose slightly, and Nasdaq futures fell 0.02%. The German DAX index rose 0.29%, the UK FTSE 100 index rose 0.16%, the French CAC40 index rose 0.27%, and the European Stoke 50 index rose 0.15%.

2. Market news interpretation

The European Central Bank cut interest rates by 25 basis points, emphasizing inflation targets and economic prospects

⑴ On June 5, 2025, the European Central Bank Administration zeizao.cnmission decided to lower the three key interest rates by 25 basis points, effective from June 11. ⑵ Deposit convenience rate, main refinancing operation rate and marginal loan convenience rate fell to 2.00%, 2.15% and 2.40% respectively. ⑶ This rate cut is based on the latest assessment of inflation prospects, potential inflation dynamics and monetary policy transmission. The current inflation rate is close to the 2% medium-term target of the Management zeizao.cnmittee. ⑷ The European Central Bank expects the overall inflation rate to be 2.0% in 2025, 1.6% in 2026 and 2.0% in 2027, down 0.3 percentage points from March forecasts, mainly due to lower energy price assumptions and strengthening the euro. ⑸Real GDP is expected to grow by 0.9% in 2025, 1.1% in 2026, and 1.3% in 2027. The growth in the first quarter is stronger than expected, but the annual growth prospects are still weak. ⑹ The ECB stressed that trade policy uncertainty puts pressure on corporate investment and exports, but government investment in defense and infrastructure will support economic growth. ⑺ Management zeizao.cnmitteeThe zeizao.cnmittee said it would decide on the monetary policy position according to the data meetings, without prior zeizao.cnmitment to a specific interest rate path, and was ready to adjust all tools to ensure inflation was stable at the medium-term target of 2%. ⑻Asset Purchase Program (APP) and Pandemic Emergency Purchase Program (PEPP) portfolios have gradually declined as they no longer reinvest the principal of maturing securities. ⑼ The European Central Bank President will further elaborate on the considerations behind these decisions at a press conference.

The ECB resolution has limited impact on the euro

⑴ On June 5, 2025, foreign exchange strategist Karamanis pointed out that the market has fully digested the ECB's interest rate cut expectations, and ECB President Lagarde is expected to remain cautious and wait-and-see. ⑵ Current market volatility expectations are low, not only because the European Central Bank resolution is difficult to bring surprises, but also because the traditional link between interest rates and foreign exchange has weakened recently. ⑶ Even if the money market's pricing of the European Central Bank's policy path before the end of the year changes significantly, it may not be enough to have a substantial impact on the euro.

The number of layoffs for US Challenger zeizao.cnpanies increased significantly

The US Challenger report shows that US employers announced layoffs of 93,816 in May, a 12% decrease from 105,441 in April and a 47% increase from 63,816 in the same period last year. "Tariffs, funding cuts, consumer spending and overall economic pessimism have put a lot of pressure on corporate employees. The zeizao.cnpany is reducing spending, slowing down hiring and issuing layoffs." As of May this year, employers have announced 696,309 layoffs, an 80% increase from 385,859 announced in the first five months of last year. zeizao.cnpared with the total number in 2024, there are still 65,049 people behind.

The UK Statistics Office admits that the April inflation data is overestimated by 0.1 percentage point

⑴ The UK Statistics Office (ONS) admits that the April Consumer Price Index (CPI) data was overestimated by 0.1 percentage point, and the actual inflation rate should be 3.4%. ⑵ONS said the error stems from the inaccurate data on automobile tax provided by the government. ⑶ This error also affects the retail price index (RPI) and CPIH (One preferred indicators for more housing costs). ⑷ONS said that according to existing policies, the April inflation data will not be revised, but will use the correct weight calculations in the May data released on June 18. ⑸ The data error has caused investors' uneasiness. The UK Statistics Office has been criticized for the unreliability of unemployment rates and producer price data, and the government launched an investigation in April. ⑹ Official inflation data are used to price a wide range of financial assets, and this error has led to market turmoil. Deutsche Bank chief British economist Sanjay Raja said many customers suffered losses due to data errors. ⑺Reuters survey shows that economists predict the median CPI in April is 3.3%. ⑻The wrong data did not affect the Bank of England's interest rate decisions, as April data was released after the Bank of England's interest rate cut on May 9. May passThe inflation data will be released the day before the Bank of England's next interest rate announcement. ⑼ONS said the error stemmed from data provided by the UK Department of Transport, which overestimated the number of vehicle and ship taxes for registered vehicles in the first year. ONS is reviewing the internal inspection process of third-party data and apologizing for the inconvenience caused.

The deadline is approaching India and the United States push for a temporary tariff agreement

The U.S. trade delegation holds two-day talks in New Delhi, India. Negotiators may eventually finalize tariff cuts and market access issues as part of the temporary agreement, sources said. "In this round of negotiations, negotiators are discussing cutting tariffs in specific industries such as agriculture and automobiles, and the benefits provided to Indian zeizao.cnpanies," said an Indian government source. Another official said the agreement could be officially announced at the end of the month, and the statement is expected to be issued by Sunday before President Trump's July 9 deadline set by President Trump.

Ireland's GDP soared due to a sharp increase in drug exports to the United States

⑴Ireland's GDP grew by 9.7% month-on-month in the first quarter of 2025, mainly due to a surge in drug exports to the United States, which may further distort the average euro zone growth rate. ⑵ Because Ireland's multinational enterprises are large in scale and their GDP data are often distorted, the government is more inclined to use revised domestic demand (MDD) to more accurately measure economic strength. ⑶ Data from the Irish Central Bureau of Statistics shows that MDD has grown strongly in the past few years, with a month-on-month increase of 0.8% in the first quarter of 2025. ⑷ Ireland's GDP is sometimes severely disconnected from broader economic activity, with preliminary estimates of 3.6% quarterly growth pushing up the euro zone's average growth rate, which grew by 0.4% in the first quarter, exceeding expectations. ⑸Ireland's GDP increased by 22.2% year-on-year, far higher than the preliminary estimate of 13.3%. ⑹Assistant Director of the Central Bureau of Statistics Christopher Sibley said the increase was mainly due to cross-border drug exports in March, especially as U.S. drugmakers stockpiled in advance to deal with potential import tariffs. ⑺ Data shows that Irish drug exports increased by 154% in the first quarter to 34 billion euros, of which 243% were exported to the United States in March. ⑻The Irish Ministry of Finance last month lowered its MDD growth forecast slightly to 2%, provided that EU export tariffs to the United States remain at 10%; if tariffs are cancelled, it is expected to increase by 2.5%. ⑼ The Ministry of Finance also raised GDP growth expectations to 4.0%, even if tariffs continue to exist, it is higher than 3.9% before Trump was elected in November last year.

The short-term and long-term trends of US Treasury bond yields

⑴ Seema Shah, chief global strategist at Xinan Fund Management, pointed out in the report that short-term and long-term US Treasury bond yields are expected to show the opposite trend in the short term. ⑵ Shah said that given the market's vigilance on bonds, the market may require large-scale spending cuts or strong economic growth to control the deficit, which will keep long-term U.S. Treasury yields high in the near term. ⑶By contrast, the economic slowdown and the prospect of the Federal Reserve's potential rate cuts later in 2025 will continue to weigh on short-term U.S. Treasury yields. ⑷ Tradeweb data shows that the 2-year U.S. Treasury yield rose 0.4 basis points to 3.881%, while the 10-year U.S. Treasury yield fell about 1 basis point to 4.353%.

The Bank of England allocated a record £68.106 billion short-term repurchase funds

⑴ The Bank of England announced on Thursday that it had allocated a record £68.106 billion (approximately $92.39 billion) seven-day funds in its weekly short-term repurchase operations. ⑵This figure is higher than the previous record of £64 billion set in April. ⑶ The Bank of England provides reserves for banks through short-term repurchase operations, and at the same time gradually sells government bonds purchased under the quantitative easing program.

The benchmark price of Middle East crude oil fell, Saudi Arabia lowered Asian buyers' prices

⑴ On June 5, the benchmark price of Middle East crude oil Oman, Murban and Dubai fell slightly after Saudi Arabia lowered its crude oil prices for Asian buyers in July. ⑵ Saudi Aramco lowered the official selling price of Arab light crude oil to Asia in July to US$1.20 per barrel above the average price of Oman/Dubai, down 20 cents from June, the lowest level since May. ⑶Dubai crude oil cash trading premium to swaps fell 3 cents to $0.79 per barrel. ⑷ The International Energy Agency (IEA) expects global energy investment to hit a record of $3.3 trillion in 2025, despite economic uncertainty and geopolitical tensions. ⑸ Global zeizao.cnmodity trader Tok Group reported that its net profit increased slightly year-on-year in the first half of 2025 to about US$1.52 billion, but revenue decreased due to the decline in average zeizao.cnmodity prices.

3. Trends of major currency pairs in the New York Stock Exchange before the New York Stock Exchange

Euro/USD: As of 20:27 Beijing time, the euro/USD rose, now at 1.1422, an increase of 0.05%. Before New York, the price of (Euro-USD) rose in recent intraday trading as it attempted to break through the stubborn resistance of the 1.1420 level, supported by its continuous trading above the EMA50 while it trades along a small bullish bias line on a short-term basis, on the other hand, we noticed negative signals starting to appear on the aftermath (RSI), which could slow the upcoming rally.

GBP/USD: As of 20:27 Beijing time, GBP/USD rose, now at 1.3580, an increase of 0.20%. Before the New York Stock Exchange, (GBPUSD) price traded calmly on the last trading day, with a slight decline, with key resistance stable at 1.3585, trying to get positive momentum that could help break through that resistance, leveraging its dynamic support represented by the exchange above the EMA50, with the main bullish trend dominantThe bit, and it trades along a small slash on a short-term basis, positive signals appear on the RSI.

Spot gold: As of 20:27 Beijing time, spot gold rose, now at 3392.58, an increase of 0.60%. Before the New York Stock Market, the (gold) price rose on the last trading day, settled above the $3,365 support, supported by positive signals (relative strength indicators), providing positive impetus, especially trading within the scope of a small bull channel, limiting its previous short-term trading, and the dynamic support represented by the exchange above the EMA50 continues.

Spot silver: As of 20:27 Beijing time, spot silver rose, now at 35.768, an increase of 3.75%. Before New York, the (silver) price surged on the last trading day, breaking through the key resistance level of $34.50, providing positive impetus for confirming the formation of a positive technical pattern, a banner pattern that provides the impetus for the upside to reach the $35.50 target, surpassing the current price with a predominant short-term bullish trend and trading along a slash, despite reaching an exaggerated overbought level, there was a positive signal on (RSI).

Crude oil market: As of 20:27 Beijing time, U.S. oil rose, now at 63.160, an increase of 0.48%. Before the New York Stock Exchange, (crude oil) prices rose in recent intraday trading because it relies on support from its EMA50, providing some positive momentum and with the emergence of positive signals on (RSI), the short-term bullish correction trend dominated after reaching oversold levels and traded along a slash.

4. Institutional View

Bank of America: Industrial demand will help silver takeoff targets look to $40

Bank of America expects that by the end of this year or early 2026, the price of silver will reach $40. "Silver is half precious metals and half for industrial use. The nature of silver precious metals has been driving it higher, and industry has been at a secondary position, but that will eventually change." Industry demand for silver set a record in 2024, leading to a structural deficit in the silver market for the fourth consecutive year. Tariff concerns and supply chain disruptions bring some negative factors, but industrial demand is expected to remain strong in 2025. Blanche said growth in the green energy sector — especially solar energy — will strongly support the growth of (silver) industrial demand. "We still look forward to a significant investment in solar panels and everything electrification. Silver is the world's best electrical conductor and will play a key role. Once the industrial activity environment is more stable, silver will shine again."

Institution: Multiple factors drive safe-haven buying silver prices to surge to a new high since 2012

Institutional analysis said spot silver prices surged to their highest levels since February 2012, as weak U.S. economic data and dovish Fed prospects drove safe-haven demand ahead of Friday's non-farm payroll report. Market expectations for the Fed's interest rate cut in September have heated up after a series of disappointing indicators were announced. The latest ADP report shows that only 37,000 new jobs were added in May, the weakest monthly increase since March 2023, while the ISM service industry PMI fell to 49.9, indicating that the industry contracted for the first time in nearly a year. In addition to economic fundamentals, geopolitical and trade tensions have also exacerbated market unrest. The U.S. doubled tariffs on steel and aluminum imports to 50%, raising concerns about the renewed trade friction between the U.S. and its major partners.

The above content is all about "[XM Foreign Exchange Market Review]: The ECB cuts interest rates by 25 basis points, and the analysis of short-term trends of spot gold, silver, crude oil and foreign exchange on June 5th". It was carefully zeizao.cnpiled and edited by the XM Foreign Exchange editor. I hope it will be helpful to your trading! Thanks for the support!

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