The USD is heading higher in early US trading and trading at new highs for the day vs the EURUSD, GBPUSD and the USDJPY. Treasury yields are moving higher with the 2 year at 3.97%, up 2.0 basis points. the 10 year yield is up 4 basis points to 4.288%. US stocks mixed with the rotation continuing from yesterday with the Dow up 65 points, the S&P near unchanged while the Nasdaq is down -22 points.

The greenback is up the most vs the GBP with a gain of 0.60% (the GBPUSD is moving lower). The dollar is higher vs the EUR by 0.50% and by 0.52% vs the JPY to start the day.

There is some anxiety in the UK politically as UK PM Starmer refuses to comment on whether Chancellor Reeves will remain in her job. He also refuses to rule out tax increases. That has put pressure on the Gilts.

In the video above, I take a technical look at the 3 major currency pairs - the EURUSD, USDJPY and GBPUSD from a technical perspective to kickstart the forex trading day.

Mortgage applications rose by 2.7% in the week ending June 27, up from 1.1% the prior week, as a slight decline in mortgage rates helped spur demand. The average 30-year mortgage rate eased to 6.79% from 6.88%, encouraging both refinancing and new purchase activity. The Mortgage Market Index climbed to 257.5 from 250.8, with the Refinance Index up to 759.7 from 713.4, showing the strongest response. Meanwhile, the Purchase Index remained steady at 165.3, essentially unchanged from 165.2. Lower rates provided a modest boost, especially to refinance activity.

The Challenger layoffs totalled 47.99K down from 93.816K last month. The better than expected data comes after better JOLT data yesterday morning. The ADP National Employment will be released at 8:15 AM ET with expectations at 95K vs 37k last month.

Tomorrow the US will release the monthly employment report on an uncustomary Thursday due to the 4th of July holiday on Friday in the US. The report is expected to show a cooling labor market, with slower job gains, a slight uptick in the unemployment rate, and modest wage growth. Markets are watching closely for signs of labor market softness that could support Fed rate cut expectations.

Key Expectations for June Jobs Report:

• Non-Farm Payrolls: +110K (↓ from 139K in May)

• Private Payrolls: +105K (↓ from 140K)

• Manufacturing Payrolls: -5K (↑ from -8K)

• Government Payrolls: -1K last month

• Unemployment Rate: 4.3% (↑ from 4.2%)

• Average Hourly Earnings (MoM): +0.3% (↓ from 0.4%)

• Average Hourly Earnings (YoY): +3.9% (unchanged)

• Average Workweek Hours: 34.3 (unchanged)

• Labor Force Participation Rate: 62.4% last month

• U6 Underemployment Rate: 7.8% last month

The US House is expected to take place today, but there are flight problems which may throw a monkey wrench in the plans.

From central bankers today:

• ECB policymaker Olli Rehn expressed concern that inflation could remain persistently below the ECB’s 2% target, highlighting the importance of staying vigilant against a potential undershoot that could unanchor expectations. While noting that the ECB is currently in a good position, he warned against complacency. Rehn emphasized that although the exchange rate is not an explicit policy target, the euro's recent appreciation has aided in achieving inflation goals and could enhance the euro's global role—especially if joint European borrowing for defense leads to the creation of a new safe asset. He acknowledged two-sided risks to inflation but maintained a dovish tone by focusing on downside risks and the need to avoid a prolonged undershoot.
• BoE policymaker Alan Taylor signaled a dovish outlook, warning that a soft landing for the UK economy is at risk amid clear signs of a slowdown and emerging cracks in the labor market. He expressed concern that inflation could fall below target, especially as energy shocks are expected to fade by 2026. Taylor emphasized the need for flexibility in monetary policy, stressing that the Bank is not on a pre-set rate path. He sees a rising probability of downside risks in 2026 due to weakening demand and trade disruptions. Despite acknowledging risks, he cautioned against aggressive rate cuts in the near term, stating that larger cuts aren't necessarily needed or desirable. However, he believes that five rate cuts may be needed in 2025, implying three additional cuts from current levels. Markets are currently pricing in a ~76% chance of a rate cut at the August meeting and two more cuts before year-end.

Yesterday, Powell at the ECB Forum said:

• U.S. economy is in a good position and that, aside from tariff effects, inflation is at a favorable level.
• He noted that higher inflation readings are expected this summer due to tariffs,
• He suggested the Fed might have already cut rates were it not for that added risk.
• He reaffirmed the Fed’s commitment to a data-dependent, meeting-by-meeting approach and did not rule out a rate cut in July of.
• He emphasized the need to monitor inflation and labor market data closely.
• On fiscal issues, he acknowledged that the U.S. debt path is unsustainable and needs to be addressed