Dollar index (Dxy00) Monday -0.57% fell and posted less for 3–1/4 years. The dollar collapsed on the last day of Q2 and remains under pressure with several countries due to uncertainties with American trade policies, trying to interact with the US before President Trump’s 9 July deadline. In addition, the increasing deficit is recession for dollars as the Congress budget office estimates that this measure will include about $ 3.3 trillions in the US deficit in the next ten years. The dollar increased its loss after the most contracted in 5 months after the June MNI Chicago PMI.
There are signs of progress in business talks with China and the European Union on the positive side for the dollar. In addition, after withdrawing the digital service tax, the business talks are back with Canada. In addition, Indian and Japanese trade negotiaters extended their stay in the US this week to iron trade deals.
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The US June MNI Chicago PMI unexpectedly fell from -0.1 to 40.4, weak with hopes of 43.0 and weakened in 5 months.
Atlanta Fed Chairman Bick said that most of the tariff pricing is not yet shown in the market, and he cuts a 25-BP rate and cuts three rates in 2026 this year.
Markets are giving exemption to 21% probability of -25 BP rate cut in July 29-30 FOMC meeting.
EUR/USD (^Eurusd) On Monday, +0.51% rose and posted a new 3-3/4 year high. The dollar weakness on Monday supported the euro. The Euro extended on Monday despite weak economic news from Eurozone and comments from ECB. The German May retail sales fell over expectation, and the German June CPI rose less than expected, which are the factors for the ECB policy and negative factors for the euro. In addition, ECB Vice President Guindos said that he expects an increase in eurozone in the second and third quarter this year “will be almost flat.”
German May retail sales unexpectedly fell by 1.6% m/m, A +weakened by an increase of 0.5% m/m and the biggest decline of more than 2–1/2 years.
German June CPI (harmony of the European Union) increased +0.2% m/m and +1.7% y/y, +0.3% m/m and + +1.8% y/y.
ECB Vice President Guindos said that the Eurozone economy is stopping due to “cruel uncertainty” around the global trade policy and the second and third quarter growth would “be almost flat.”
In the July 24 policy meeting, 4% of the probability of cutting -25 bp rate cut by ECB is pricing.
USD/JPY (^Usdjpy) Monday -0.48%fell. President Trump said that Japan is inappropriate in auto trade, and he can maintain 25% tariffs on Japanese cars, followed by safe-heaven’s increased demand today. The profit in Yen fell to the low of 8-week on Monday after a 10-year-old T-Note yield.
Japanese May was reduced to the Yen after growing less than industrial production, a dovish factor for BOJ policy. In addition, Monday’s rally in Nikkei Stock Index has curbed some safe-horn demand for Yen at a high level of 11-1/2 months.
Japan’s May industrial production +0.5% m/m increased, +3.5% m/m expectations.
August gold (Gcq25) Monday +20.10 ( +0.61%), and July silver (Sin25) Closed from -0.185 (-0.51%). Precious metals mixed on Monday. Monday slide in the dollar index is a rapid factor for metal prices for 3–1/4 years. Gold also supports the value of value as a store of value due to concerns that President Trump’s expenditure and tax bill will increase the US deficit, as the CBO has estimated that the bill will add $ 3.3 trillion to deficit in the next ten years. In addition, trade uncertainty has promoted the demand for safe-heaven assets, including precious metals, as the nation presidents scramble the nation to interact with the US before Trump’s time limit of 9 July. Gold prices fell at a low of 8-week on Monday after a 10-year T-Note yield. After Gold Holdings in ETFs, the prices of buying gold funds continue to support, reaching 1-3/4 years high last Friday.
The benefits of precious metals were limited as a Monday rally in the S&P500, which was a new record for precious metals for high low-safe-horn demand. Silver prices decreased on Monday due to concern about the demand for industrial metals after the most contracted in 5 months after US June MNI Chicago PMI. In addition, ECB Vice President Guindos said that the increase in eurosone in the second and third quarters of this year would be “almost flat”.
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