Dear Reader,

Today's overview of economic news and market action

• Last week, the ECB cut rates by 25bps as expected …
• Meantime, US payrolls and earnings data printed above the consensus …
• The strong US labour market data supported the dollar into the weekend …
• This week, the Euro has started under some downward pressure …
• In level terms, EUR/USD is down at the midpoint of $1.07-1.08 …
• EUR/GBP is back at the halfway mark of 84-85p …
• GBP/US is in the lower half of $1.27-1.28 …
• This week, the monetary policy focus will be on the US Fed …
• Data-wise, US CPI (May) and UK Labour market & GDP (both April) are due …

• In the last week, we have seen further signs that central banks are starting to alter their monetary policy settings, with rate cuts being announced.
• The ECB cut interest rates despite revising higher its inflation forecasts.
• This week, the monetary policy spotlight will shift to the US Fed. 

The ECB’s Governing Council meeting for June saw the central bank cut its key interest rates by 25bps. The Deposit rate was lowered to 3.75% (from 4.00%), while the refi rate was reduced to 4.25% (from 4.50%). The June rate changes follow five consecutive policy meetings where the ECB kept rates on hold, having been in a rate hiking cycle between July’22 to September’23.

The latest AIB PMI® survey data indicated a faster increase in Irish service sector activity in May, as new business growth strengthened. The 12-month outlook also improved, and this was reflected another robust rise in services employment. There was a notable rebound in the Technology, Media & Telecoms sector, while Financial Services continued to expand sharply.

AIB Ireland Manufacturing PMI® data signalled a broad stabilisation in operating conditions in May as the headline index from the survey ticked up to a three-month high. Softer and only marginal contractions in output volumes and incoming new work were recorded during the latest survey period.