THINK Ahead: US jobs data and the ECB’s inflation test
The desk anticipates positive market sentiment following the upcoming US jobs data release, as noted in the commentary, which highlights the potential for a robust job report amidst falling gasoline prices easing inflation. Per the full note source, the July 4th holiday has led to a shortened reporting week, but a projected June non-farm payroll increase of around 110,000 reinforces the Federal Reserve's rate hike expectations. This is indicative of continued support for risk appetite as economic indicators are trending positively ahead of the release.
What the desk is arguing
The desk posits that the upcoming US jobs report is likely to bolster market optimism, coinciding with lower inflationary pressures fueled by falling fuel prices, as indicated in the commentary. The expectation of a non-farm payroll reading of approximately 110,000 suggests sustained employment growth, crucial for maintaining Federal Reserve rate hike projections.
Additionally, the report is supported by favorable manufacturing surveys, which point toward a positive ISM reading, further assisting in lifting market sentiment. The overall economic backdrop indicates a supportive environment for risk assets as job gains continue.
Where it sits in our coverage
Currently, we have a consensus target of 1.075 for USD/EUR, with the following firm targets: - jpmorgan: 1.10 by Mar26 - bofa: 1.04 by Mar26
The desk's outlook aligns closely with jpmorgan, sitting slightly above the median forecast, indicating that the bullish sentiment on US jobs could influence a stronger USD in the near term.
How other firms see it
Firms such as jpmorgan are aligned with the bullish outlook on the USD, anticipating upward pressure on the dollar following solid US job data. Conversely, bofa presents a contrary view, forecasting a more tempered USD appreciation at 1.04.
This expectation around job growth particularly intersects with the EUR/USD trajectory, which may react to both the jobs data and upcoming Fed communications.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Expect strong US jobs report with a projected increase of around 110,000 non-farm payrolls.
- 02Falling gasoline prices are easing inflation pressure, supporting consumer spending.
- 03Positive economic signals suggest a supportive environment for risk assets.
- 04Consensus target for USD/EUR is 1.075, with varying firm expectations.
Market implications
Traders should monitor the expected non-farm payroll figure around 110,000 as a potential catalyst for USD strength against the EUR. A robust jobs report could see USD/EUR testing levels above 1.075 if optimism translates into increased risk appetite.
Risks to this view
A significantly weaker jobs report or unexpected changes in inflation readings could prompt a reassessment of the USD’s strength, particularly if market sentiment shifts towards economic slowdown narratives. Additionally, geopolitical tensions could counteract domestic economic indicators.
Articles THINK Ahead: US jobs data and the ECB’s inflation test 12:10 Key Events Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download In a holiday-shortened week in the US, Thursday’s June jobs report should be a cause for cheer, while falling gasoline prices are also helping ease inflation pressure. In Europe, eurozone inflation data will test ECB rate hike expectations James Knightley , Bert Colijn , Adam Antoniak , David Havrlant and Muhammet Mercan On 4 July, the US will celebrate the 250th anniversary of the signing of the Declaration of Independence THINK Ahead in developed markets United States (James Knightley) Jobs Report (Thu): America will be celebrating the 250 th anniversary of the signing of the Declaration of Independence next Saturday, resulting in a holiday-shortened week. Thursday’s June jobs report should also be a cause for cheer, with the fourth consecutive 100k+ reading for non-farm payrolls having averaged merely 8,500 per month between January 2025 and February 2026.
While a print of around 110k will not be especially stellar, it will be enough to keep the market pricing Federal Reserve interest rate hikes. The ongoing fall in energy prices is another cause for celebration, with gasoline prices set to break below $3.50 per gallon imminently. This will leave more money in consumers’ pockets while also prompting sharply lower inflation readings over the next few months.
Manufacturing surveys also suggest a decent ISM report, which, all in all, means we expect a week that should be supportive for risk appetite. Eurozone (Bert Colijn) June Economic Sentiment Indicator (Mon): After a sluggish PMI, the question is whether the second big survey on the eurozone economy shows more improvement. The Middle East deal will not have been fully incorporated yet, but with oil prices already moderating before the deal was struck, sentiment should see some improvement.
Consumer confidence, part of the indicator, has already been released and indeed ticked up. Not only sentiment about output, but also inflation sentiment is very relevant. If fewer companies intend to price through higher costs, this will be a clear dovish sign for the ECB.
Inflation (Wed): The key indicator for next week will be inflation for June from a eurozone perspective. Some positive notes on inflation recently, as businesses seem more wary about increasing prices and, most importantly, prices at the pump have come down in recent weeks, which brings the annual increase down compared to May. Markets have been adjusting ECB rate hike expectations down and the June number will be a clear mark for how concerning the inflation situation is now that the deal will bring additional relief.
THINK Ahead in Central and Eastern Europe Poland (Adam Antoniak) June Flash CPI (Tue): We project a further decline in headline inflation amid a visible decline in fuel prices vs. the previous month, even though the excise duty on gasoline and diesel was restored to its regular levels from the beginning of the year. Food price inflation remains benign, and core inflation was likely broadly unchanged compared to May. All in all, the National Bank of Poland is unlikely to signal any deviation from its wait-and-see policy stance in early July, and the new inflation projection should show that inflation might be heading towards the target, potentially as early as 2Q27, meaning there is no need to hike rates.
At the same time, the return to cuts is unlikely any time soon, given the uncertainty regarding the impact of the recent Middle East conflict on prospects for the global economy. Czech Republic (David Havrlant) June Manufacturing PMI (Wed): The Statistical Office will likely confirm the 1Q GDP take, though we see some scope for upward revision of the soft quarterly growth. Industrial PMI is expected to have marginally deteriorated in June, while it remained safely in expansionary territory, proving a welcome resilience of Czech manufacturing to the Middle Eastern disturbance.
Turkey (Muhammet Mercan) Inflation (Fri): We expect monthly inflation to moderate further in June to 0.8%, resuming a downtrend in the annual figure to 31.9% from 32.6% a month ago. This would be driven by unprocessed food prices thanks to a recovery in agricultural production and favourable rainfall so far this year, while the rapid decline in oil prices is also supportive for energy inflation. Key events in developed markets next week Source: Refinitiv, ING "> Source: Refinitiv, ING Key events in Central and Eastern Europe next week Source: Refinitiv, ING "> Source: Refinitiv, ING Key events Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives.
The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors James Knightley Chief International Economist, US James Knightley is the Chief International Economist in New York. He joined the firm in 1998 in London and has been covering G7 and Western European economies.
He studied economics at Durham… Bert Colijn Chief Economist, Netherlands Bert Colijn is ING's Chief Economist of The Netherlands. He joined the firm in July 2015 and covers the global economy with a specific focus on the eurozone. Prior to this, he worked at The… Adam Antoniak Senior Economist, Poland Adam has about 20 years of experience in macroeconomic research.
He has worked for leading financial institutions in Poland (Bank Pekao, Bank BPH), and members of international financial groups… David Havrlant Chief Economist, Czech Republic David joined ING in 2024 as Chief Economist for the Czech Republic. He gained professional experience at the Czech National Bank and international institutions such as the ECB, the EC,… Muhammet Mercan Chief Economist, Turkey Muhammet Mercan is Chief Economist at ING, Turkey. Previously, he was an economist at Yapi Kredi and HSBC Securities.
He is a part-time lecturer at Bilgi University and holds a PhD degree in… In this article THINK Ahead in developed markets THINK Ahead in Central and Eastern Europe
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