Gold expands gains as the dollar falls
Gold prices rose in European trade on Monday on track for the second profit in a row, trading above $3300 an ounce and moving away from a five-week low as the dollar weakened.
Traders await crucial US labor data this week to gather more clues on the future of Fed rate cuts this year.
The Price
Gold prices rose 1.25% today to $3343 an ounce, with a session-low at $3302.
On Monday, gold rose 0.9%, the first profit in three days away from a five-week trough at $3247.
The Dollar
The dollar index fell 0.3% on Tuesday, sharpening losses for the seventh straight session and plumbing a three-year nadir at 96.61 against a basket of major rivals.
US President Donald Trump’s recent tax bill raised concerns about the financial stability of America, with ongoing uncertainty as well about US trade deals.
Investors are now betting on a faster pace of Fed rate cuts this year, while waiting for crucial US data this week, including the payrolls report on Friday.
Trump continued to pressure the Federal Reserve to cut interest rates, and sent Fed Chair Powell a list of interest rates by global central banks, saying that US rates should be between the 0.5% Japanese rate and the 1.75% Danish rate.
US Rates
Investors interpreted Fed Chair Jerome Powell’s last week Congressional testimony as leaning cautious, after saying that rate cuts are likely if inflation doesn’t rise this summer in response to tariffs.
According to the Fedwatch tool, the odds of a Fed 0.25% interest rate cut in July stood at 20%.
The odds of such a cut in September stood at a much better 93%.
SPDR
Gold holdings at the SPDR Gold Trust fell 2.29 tons yesterday to a total of 952.53 tons, the lowest since June 20.
Eurozone inflation matches estimates in June
The eurozone's consumer prices rose 2.0% y/y in June, matching expectations, and up slightly from 1.9% in the previous reading.
Excluding food and energy prices, inflation rose 2.3% last month as expected, same as the previous reading.
Euro rises above $1.18 for first time in four years ahead of European inflation data
The euro rose in European trade on Tuesday, on track for the ninth daily profit in a row against the US dollar, and trading above $1.18 for the first time since 2021.
It comes amid concerns about the Federal Reserve’s independence and US financial stability after new attacks by Trump against Powell.
Recently, the odds of a European Central Bank’s interest rate cut in July tanked, with investors now awaiting eurozone inflation data later today.
The Price
The EUR/USD price rose 0.2% today to $1.1807, the highest since September 2021, with a session-low at $1.1774.
On Monday, the euro rose 0.5% against the dollar, the eighth daily profit in a row, marking the longest such streak of daily gains this year.
In June, the euro rose 3.9%, the sixth monthly profit in a row after massive German stimulus plans.
US Dollar
The dollar index fell 0.3% on Tuesday, sharpening losses for the seventh straight session and plumbing a three-year nadir at 96.61 against a basket of major rivals.
US President Donald Trump’s recent tax bill raised concerns about the financial stability of America, with ongoing uncertainty as well about US trade deals.
Investors are now betting on a faster pace of Fed rate cuts this year, while waiting for crucial US data this week, including the payrolls report on Friday.
Trump continued to pressure the Federal Reserve to cut interest rates, and sent Fed Chair Powell a list of interest rates by global central banks, saying that US rates should be between the 0.5% Japanese rate and the 1.75% Danish rate.
European Rates
ECB President Christine Lagarde hinted at the possible end of the current cycle of policy easing, which was in response to a combined shock such as the Covid 19 pandemic, the Ukrainian war, and the energy crisis.
According to a Reuters source, most ECB members now aim at holding interest rates unchanged in July, with the global markets now expecting just an additional 25 basis points of rate cuts by the end of the year.
The odds of a 0.25% ECB rate cut in July now stood below 30%, with traders awaiting more eurozone data and remarks by ECB officials to gather more clues.
European Inflation
Later today, eurozone inflation data is expected to show a 2% increase in June, up from 1.9% in May, while core prices are expected up 2.3%.
Yen extends gains to three-week high against the dollar
The yen rose in Asian trade on Tuesday against a basket of major rivals, expanding gains for the second straight session against the dollar and hitting a three-week high against a basket of major rivals.
The odds of a Japanese interest rate hike in July tumbled following the Bank of Japan’s latest policy meeting, with traders now awaiting more Japanese labor and inflation data to gather clues.
The Price
The USD/JPY price fell 0.4% today to 143.43, the lowest since June 13, with a session-high at 144.05.
The yen rose 0.45% on Monday against the greenback, the second profit in three days.
US Dollar
The dollar index fell 0.3% on Tuesday on track for the seventh straight loss in a row, plumbing three-year lows at 96.61 against a basket of major rivals.
US President Donald Trump’s recent tax bill raised concerns about the financial stability of America, with ongoing uncertainty as well about US trade deals.
Investors are now betting on a faster pace of Fed rate cuts this year, while waiting for crucial US data this week, including the payrolls report on Friday.
Trump continued to pressure the Federal Reserve to cut interest rates, and sent Fed Chair Powell a list of interest rates by global central banks, saying that US rates should be between the 0.5% Japanese rate and the 1.75% Danish rate.
Japanese Rates
The odds of a Bank of Japan’s 0.25% interest rate hike in July is still below 40%.
Now investors await more clues from Japan this week to form a more accurate prediction.