U.S. Non-Farm Payrolls, U.S. Unemployment Rate, Average Hourly Earnings

The euro initially surged on Thursday after the European Central Bank delivered a widely anticipated interest rate cut, only to pare back gains as President Christine Lagarde hinted at a potential pause in the easing cycle.

The ECB lowered its key interest rate by 25 basis points to 2.00%, marking the start of a new policy phase. However, the central bank’s statement struck a cautious tone, signaling a data-dependent approach and leaving the door open for holding rates steady at the upcoming July 24 meeting.

Lagarde said monetary policy is "well-positioned" given current uncertainties, and noted that the central bank is nearing the end of its easing cycle.

Across the Atlantic, softer-than-expected U.S. jobless data kept hopes alive that the Federal Reserve may still consider cutting rates later this year. Initial jobless claims rose to 247,000 for the week ending May 31, above expectations of 235,000 and up from 240,000 the previous week. Meanwhile, the U.S. trade deficit narrowed significantly to $61.6 billion in April—the lowest level since September 2023—as companies pulled back on preemptive imports ahead of anticipated tariffs.

Governor Adriana Kugler noted that monetary policy remains well-positioned for a shifting economic landscape and flagged inflation risks from higher tariffs. Philadelphia Fed President Patrick Harker emphasized a need for patience amid economic uncertainty, warning of a possible scenario where inflation and unemployment rise in tandem.

Markets are now looking ahead to the May Nonfarm Payrolls report, with expectations for job growth to slow from 177,000 to 130,000 and the unemployment rate to remain steady at 4.2%.

Bitcoin slid further on Thursday, continuing its recent downtrend as profit-taking and broader market uncertainty kept crypto investors on edge. A high-profile public dispute between former President Donald Trump and tech billionaire Elon Musk added to the volatility, hitting sentiment around memecoins tied to both figures.

Investor confidence was rattled in part by a sharp selloff on Wall Street, fueled by concerns over U.S. economic resilience and heightened political tensions. Markets also turned cautious ahead of key U.S. nonfarm payrolls data due later in the day, expected to confirm a continued cooling in the labor market.

Memecoins linked to Trump and Musk—particularly Dogecoin and the Trump-themed token $TRUMP—were hit hard in the wake of an intensifying social media feud between the two public figures.

The conflict was sparked by Musk’s vocal opposition to a sweeping tax cut and spending bill backed by Trump, which Musk labeled a “pork-filled… abomination.” Trump responded by threatening to revoke government contracts awarded to Musk’s companies, including SpaceX, and publicly questioned Musk’s mental fitness, calling him “crazy.”

Bitcoin is poised to close its second consecutive week in the red. The pullback follows a sharp rally that saw prices touch an all-time high near $112,000 in mid-May. Since then, the cryptocurrency has largely moved sideways, with traders booking profits amid increasing macroeconomic uncertainty.

Oil prices edged higher on Thursday, reversing losses from the prior session as signs of renewed dialogue between the United States and China boosted investor sentiment. The rebound came amid broader concerns about demand and supply dynamics, with geopolitical risks and upcoming economic data also in focus.

The gains followed confirmation that U.S. President Donald Trump and Chinese President Xi Jinping had spoken by phone, agreeing to resume trade discussions. The call, reportedly initiated by Trump, helped ease fears of an escalating trade war between the world’s two largest economies.

Trump characterized the call as “very positive” and said lower-level negotiations would resume. “We’re in very good shape with China and the trade deal,” he told reporters.

The optimistic trade headlines helped oil recover from Wednesday’s losses, when data from the U.S. Energy Information Administration (EIA) showed unexpected increases in gasoline and distillate stockpiles, signaling weaker fuel demand.

Adding to the bullish sentiment were ongoing wildfires in Canada, which have the potential to disrupt oil production, and a broader set of geopolitical tensions that continue to support prices despite expectations of a supply surplus later this year.

The US 500 ended the session with losses on Thursday as a sharp decline in Tesla shares weighed on broader sentiment, partially offset by renewed optimism surrounding U.S.-China trade relations. Ongoing concerns over the labor market and global trade tensions also contributed to investor caution.

Tesla Inc. shares plunged more than 14%, marking one of the steepest single-day declines in recent months. The selloff followed escalating tensions between CEO Elon Musk and former President Donald Trump.

The rift began after Musk sharply criticized a sweeping tax-and-spending bill championed by Trump, calling it a “pork-filled abomination.” In response, Trump expressed “disappointment” in Musk and hinted at reevaluating government contracts with Tesla and SpaceX. The public feud rattled investor confidence in what was previously viewed as a politically strategic relationship for the electric vehicle maker.

A 90-minute phone call between Trump and Chinese President Xi Jinping provided a rare positive catalyst. The leaders agreed to resume trade talks, with key negotiators—Scott Bessent, Howard Lutnick, and Jamieson Greer—slated to meet with their Chinese counterparts in coming weeks.

U.S. labor market data released Thursday added to mounting concerns about economic softness.

In corporate news, Broadcom took center stage on Thursday’s earnings calendar. Investors are eager for insights into the semiconductor giant’s exposure to artificial intelligence demand, particularly as concerns grow over potentially slowing enterprise spending in the AI space.