- July 4, 2025
- Posted by: Melanie Scott
- Category: Market News
It’s been a relatively subdued week in the markets, with Canada observing a holiday on Tuesday and our neighbours to the south celebrating Independence Day today.
In Europe, Monday’s inflation data out of Germany confirmed that the disinflationary process is continuing in small, cautious steps. Headline inflation came in at 2.0% year-over-year in June, down slightly from 2.1% in May, bringing it precisely in line with the ECB’s target. Core inflation also edged lower to 2.7% from 2.8%, maintaining a slow but steady descent that keeps rate cut expectations alive for later this year.
In the U.S., economic data painted a mixed picture this week.
On Tuesday, the ISM Manufacturing PMI registered 49.0 for June, a slight improvement from 48.5 in May but still signaling contraction in the sector for a fourth consecutive month. Meanwhile, the latest JOLTS report showed job openings little changed at 7.8 million, with both hiring and separations holding steady, suggesting a labour market that’s cooling but remains resilient.
Wednesday’s ADP Non-farm employment change report surprised to the downside, with the economy shedding 33,000 private sector jobs in June (excludes farming industry and government). Wage growth slowed slightly but remained elevated at 4.4% year-over-year.
Thursday’s official U.S. employment data offered more reassurance. The economy added 147,000 nonfarm payroll jobs in June, with job creation led by the state government and healthcare sectors, while federal government employment continued to decline. The unemployment rate held at 4.1%, confirming a steady, if somewhat slowing, labour market.
FX markets traded in relatively narrow ranges this week, with the U.S. dollar stabilizing after recent losses as the market weighs signs of moderating inflation against a still-firm labour market. The euro held onto recent gains, supported by the latest inflation data and expectations for gradual ECB easing later this year. The Canadian dollar was quiet, reflecting the holiday-shortened week and a lack of major domestic catalysts. Current market conditions:
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