Markets kicked off the week on a bullish note as trade optimism fueled risk appetite and powered fresh record highs in U.S. equities.
With major data and central bank speeches on deck, traders wasted no time adjusting positions in anticipation of more rate cut drama.
Here are headlines you may have missed in the last trading sessions!
Headlines:
- U.S., Canada to resume trade talks after Ottawa drops Digital Services Tax
- Treasury Secretary Bessent hinted that the next Fed Chair could join the Fed as soon as January
- Japan industrial production prel for May: 0.5% m/m (0.4% m/m forecast; -1.1% m/m previous); -1.8% y/y (0.3% y/y forecast; 0.5% y/y previous)
- New Zealand ANZ business confidence for June: 46.3 (45.0 forecast; 36.6 previous)
- Australia TD-MI inflation gauge for June: 0.1% m/m (0.2% m/m forecast; -0.4% m/m previous)
- China NBS manufacturing PMI for June: 49.7 (50.0 forecast; 49.5 previous); Non-manufacturing PMI at 50.5 (50.5 forecast; 50.3 previous)
- Germany retail sales for May: -1.6% m/m (0.5% m/m forecast; -1.1% m/m previous); 1.6% y/y (2.5% y/y forecast; 2.3% y/y previous)
- U.K. GDP growth rate final for Q1 2025: 1.3% y/y (1.3% y/y forecast; 1.5% y/y previous); 0.7% q/q (0.7% q/q forecast; 0.1% q/q previous)
- Swiss KOF leading indicators for June: 96.1 (100.0 forecast; 98.5 previous)
- U.K. mortgage approvals for May: 63.03k (60.1k forecast; 60.46k previous)
- U.K. net lending to individuals for May: 2.9B (3.5B forecast; 0.82B previous)
- Germany consumer price index prel for June: 2.0% y/y (2.2% y/y forecast; 2.1% y/y previous); 0.0% m/m (0.2% m/m forecast; 0.1% m/m previous)
- ECB President Lagarde warned of “uncertain” future leading to more volatile inflation
- Goldman Sachs pulls forward Fed rate cut forecast from December to September on underwhelming tariff effects and labor market softness
- U.S. Chicago PMI for June: 40.4 (44.0 forecast; 40.5 previous)
- U.S. Dallas Fed manufacturing index for June: -12.7 (-10.0 forecast; -15.3 previous)
- U.S. President Trump renewed his rate cut calls and said, “We should be paying 1% interest, or better!”
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Risk assets kicked off the week with another round of gains as trade hopes took the spotlight.
The S&P 500 and Nasdaq both tagged new record highs, rising about 0.5%, while the Dow tacked on 0.6% and inched closer to a milestone of its own. The rally picked up steam after Canada dropped its digital services tax on U.S. tech firms, clearing the way for trade talks to get back on track ahead of that big July 9 tariff deadline.
Over in Europe, stocks couldn’t quite keep up. Major indexes closed mixed, weighed down by month-end rebalancing and lingering questions around U.S. tariffs. Meanwhile, gold got a boost from a weaker dollar, rocketing from $3,250 to north of $3,300. Trump’s push for 1% interest rates and Goldman Sachs now eyeing a September Fed cut helped turn the tide against the buck. The 10-year Treasury yield slid to 4.23%, hitting a two-month low as rate cut calls grew louder.
Crude oil eased up a bit, with WTI settling at $64.90, despite locking in a monthly gain. Traders seemed cautious after China’s PMI numbers sent mixed signals on demand. Bitcoin didn’t join the party either, slipping from $108,800 to around $107,200 and staying out of sync with the broader risk-on vibe.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Majors Chart by TradingView
The U.S. dollar fell broadly on Monday and marked its sixth consecutive monthly decline as Trump’s aggressive monetary policy demands weighed on sentiment. USD/JPY led the charge lower, tumbling from 144.10 toward 143.80 as the yen found safe-haven appeal despite weak Japanese industrial production data and mixed China PMIs that showed manufacturing barely expanding while services disappointed.
The Greenback initially drifted lower during Asian hours after Canada’s weekend decision to scrap its digital services tax eased trade tensions. A brief reprieve came around the London open as month-end flows, possibly as U.K. final GDP data, and lingering tariff uncertainties ahead of the July 9 deadline provided temporary support. However, any gains proved fleeting as the US session brought a fresh wave of selling pressure.
EUR/USD surged above 1.17 to nearly four-year highs after Trump intensified his Fed criticism, demanding 1% interest rates and calling Powell’s board a failure. The move accelerated when Goldman Sachs shifted their Fed cut forecast from December to September, while soft German retail sales data did little to dent euro strength. Sterling and the commodity currencies also capitalized on dollar weakness, with the DXY ultimately sliding to 96.80.
Upcoming Potential Catalysts on the Economic Calendar
- U.K. Nationwide housing prices for June at 6:00 am GMT
- Australia commodity prices for June at 6:30 am GMT
- Swiss retail sales for May at 6:30 am GMT
- Swiss procure.ch manufacturing PMI for June at 7:30 am GMT
- Germany unemployment rate for June at 7:55 am GMT
- Germany HCOB manufacturing PMI final for June at 7:55 am GMT
- Euro area HCOB manufacturing PMI final for June at 8:00 am GMT
- U.K. S&P Global manufacturing PMI final for June at 8:30 am GMT
- Euro area CPI growth rate flash for June at 9:00 am GMT
- ECB Schnabel speech at 10:40 am GMT
- ECB forum on central banking
- ECB President Lagarde speech at 1:30 pm GMT
- U.K. BOE Gov Bailey speech at 1:30 pm GMT
- Japan BOJ Gov Ueda speech at 1:30 pm GMT
- U.S. Fed Chair Powell speech at 1:30 pm GMT
- U.S. S&P Global manufacturing PMI final for June at 1:45 pm GMT
- U.S. ISM manufacturing PMI for June at 2:00 pm GMT
- U.S. JOLTs job openings & quits for May at 2:00 pm GMT
- U.S. Dallas Fed services index for June at 2:30 pm GMT
- U.S. API crude oil stock change for June 27 at 8:30 pm GMT
- Australia AIG manufacturing index for June at 11:00 pm GMT
Traders are in for a BUSY day with tons of top and mid-tier events on tap. We’ve got euro area CPI and German jobs and PMI data coming up, which could shake up ECB rate cut expectations. ECB’s Lagarde and Schnabel are both speaking, so the euro might get jumpy.
In the U.S., all eyes are on Powell, the ISM manufacturing PMI, and JOLTs numbers since they could steer the Fed narrative and spark some dollar and risk asset moves.
Keep an eye out too for updates on the U.S. tax bill, trade headlines, and any fresh rate cut calls that could drive broader risk and dollar sentiment!
As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!
