Forexlive Americas FX news wrap: US-China talks continue, progress cited

• Lutnick: Talks are going really well, hope they end this evening
• World Bank cuts 2025 global growth forecast by 0.4 percentage points
• Bessent might shift from Treasury to Fed chair - report
• US treasury auctions $58B of 3 year notes at a high yield of 3.972%
• Drill, baby, drill? US agency sees US oil prodcution falling next year
• ECB's Vujcic says no need to discuss a rate cut until September
• 59 out of 105 economist see the Fed cutting next quarter (likely September).
• US May NFIB small business optimism index 98.8 vs 95.9 expected

Markets:

• WTI crude oil down 54-cents to $64.75
• US 10-year yields down 1.6 bps to 4.47%
• Gold flat at $3327
• S&P 500 up 0.5%
• CAD leads, GBP lags

It was a day that was light on newsflow with everyone watching the US-China talks in London like a papal conclave. The only signal came late with Lutnick upbeat on talks but warning they could stretch into tomorrow. The market took that as a signal to buy stocks and bitcoin but the FX market was less impressed.

The mover on the day was the pound, which lost ground in European trade on a poor jobs report but recouped most of it by the end of European trading. Part of that was on general USD softness but there are also lingering questions about ONS data quality. On the day, it finished just below 1.3500 and down 50 pips.

USD/JPY climbed on hopes for a positive resolution in London, rising to 145.00 before backing off a tad. Treasury yields had been lower at the outset of US trading but reversed higher in part after a small tail in the 3-year auction.

Oil attempted to break out as it rose to a two-month high before reversing lower. The World Bank report emphasized some growth risks in H2 while the EIA retained its view on 2025 US oil production despite lower prices. Even with oil prices dragged lower, the loonie was well-supported on optimism about a US-Canada trade pact before the G7.