Forex Today: Dollar struggles to recover as US protests calm, data beats, all eyes on ECB stimulus


Here is what you need to know on Thursday, June 4:

The market mood remains moderately upbeat amid a sense of calm in US protests and after relatively upbeat US economic data leading toward Friday's jobs report. The European Central Bank's rate decision is left, right, and center, with additional bond-buying expected.

The ECB is set to increase its Pandemic Emergency Purchase Program (PEPP) bond-buying scheme, perhaps by as much as €500 billion. The current €750 billion package will likely run out by the autumn. The Frankfurt-based institution is will likely defy the German constitutional court and support the economy. Christine Lagarde, President of the ECB, will present new staff economic forecasts: EUR/USD has been consolidating its gains above 1.12, the highest since March. 

German Chancellor Angela Merkel and her coalition partners agreed on a €130 billion stimulus plan, larger than had been expected. The wide package consists of tax cuts and infrastructure spending that may have an impact on other countries. COVID-19 statistics continue falling in the old continent. 

US data: The ISM Non-Manufacturing Purchasing Managers' Index beat expectations, showing a rebound also in hiring. ADP's private-sector jobs report showed a loss of only 2.76 million in May, far better than estimated and perhaps too good to be true. Tension is mounting ahead of Friday's Non-Farm Payrolls. Weekly jobless claims are eyed:

See: Jobless Claims Preview: It must be spring--signs of recovery

Protests against racial discrimination continued in American cities, albeit at a calmer tone and without violence. President Donald Trump has come under pressure for his handling of the event and has seen his approval falling ahead of November's elections.

The Federal Reserve has tweaked its municipal bonds scheme, providing more support to the economy. Illinois became the first US state to tap into the fund. The Fed announces its decision next week and may add more stimulus. Support from the central bank has been boosting stocks, weighing on the dollar, in the past few months.

Gold has been clawing its way back above $1,700 after suffering a sharp drop on Wednesday. See Fibonacci lines are golden, a gold trading idea, and more – Interview with Chris Svorcik

Brexit: The Bank of England warned about a no-trade-deal Brexit as talks between the EU and the UK remain deadlocked. The current round of negotiations concludes on Friday.

UK: Coronavirus statistics have remained elevated, frustrating officials that had hoped for a quicker decrease. Prime Minister Boris Johnson seemed more optimistic. 

Oil prices are off their highs amid contradicting reports about talks between OPEC+ members. An extension of current production cuts is on the cards. Talks between Saudi Arabia, Russia, and others continue on Thursday.

USD/CAD is hovering around 1.35 after the Bank of Canada left its interest rate unchanged, scaled back market operations, and also seemed to rule out negative interest rates. 

AUD/USD is holding onto gains around 0.69 after Australia's final retail sales figures showed a leap of 17.7% in April and the trade balance surplus beat expectations with A$8.8 billion. 

Cryptocurrencies are looking for a new direction after several volatile days, with Bitcoin hovering around $9,600.

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