The euro rallied to four-year highs against the dollar as investors await the results of the US-Eurozone trade negotiations before the final July deadline.

As the Iran-Israel geopolitical tensions calm down following the ceasefire, the markets now focus on the US monetary policy. 

A recent announcement by US President Trump on choosing an early candidate for the Fed Chair job to undermine Powell, raised concerns about the independence of the Fed.

Trump once again criticized Powell for refusing to cut interest rates, and asserting Powell will leave his position soon.

Powell told the Senate of the need to be cautious with monetary policies, as Trump’s tariffs represent a risk to inflation.

Euro Performance

The EUR/USD pair fell mildly to $1.16885, after hitting September 2021 highs earlier at $1.1745.

The dollar index remains near March 2022 lows at 97.398 on track for a 2% loss in June, the sixth consecutive month of losses. 

Investors await any signs of progress in the US-EU trade negotiations, with the German Chancellor Merz calling for a “quick and simple trade deal” with the US.

US-China Rare Earth Minerals Agreement 

White House officials said the US reached an agreement with China to accelerate shipments of rare earth minerals to the US.

Otherwise, a weaker dollar pushed the Aussie to a seven-month peak at $0.6564 on Thursday.

Other emerging currencies also surged, with the Taiwanese dollar up to April 2022 highs. 

France Calls for Steps to Boost Euro

France has pushed EU members to take additional measures to boost the euro’s status as the world’s global currency reserve.

It’s a years-long push from Paris to support joint borrowing and fiscal unity among EU members to underline the euro’s position around the world.

IMF Chief Gorgeiva also said there’s a huge opportunity for the euro to play a larger global role, which is another sign of the decline of the dollar’s appeal worldwide. 

ECB President Christine Lagarde called this “the euro’s global moment”, but EU countries need to reform to take this chance and provide a larger offering of safe havens. 

She noted that total EU debt is only 89% of total GDP, compared to 124% in the US, giving the EU a unique chance at providing high-quality safe assets.

Oil prices rose marginally on Thursday amid ongoing caution and uncertainty about the Iran-Israel ceasefire.

The oil market was boosted after official EIA data showed US crude stocks fell for the fifth straight week.

On trading, Brent August futures rose 0.10%, or 5 cents to $67.73 a barrel.

US crude futures due in August rose 0.5%, or 32 cents to $65.24 a barrel.

US stock indices rose on Thursday after recent data confirmed the strength of the labor sector.

Earlier government data showed US unemployment claims down to 236 thousand in the week ending June 21, while analysts expected 244 thousand.

US GDP shrank 0.5% y/y in the first quarter according to the final reading, compared to a 0.2% contraction in the previous reading. 

On trading, Dow Jones rose 0.7% as of 15:38 GMT, or 286 points to 43,270 points, while S&P 500 added 0.5%, or 34 points to 6126 points, as NASDAQ climbed 0.5%, or 112 points to 20086 points. 

Copper prices rallied to three-month highs on Thursday on a weaker dollar, concerns about supplies and speculative buying.

Copper three-month futures rose 1.6% at the London Metals Exchange to $9867 a ton, the highest since March 28.

The dollar index hit early 2022 lows amid increasing concerns about the Fe’s independence amid constant Trump attacks on Fed Chair Powell.

A weaker dollar makes commodities cheaper to holders of other currencies. 

Price Premium Hints at Shortage

The price premium between the spot copper contract in London and the three-month future rose to $200 a ton from $101 on Wednesday.

Thus likely shows concerns about supply shortages compared to demand, especially in China.

Copper futures rose 0.6% at the Shanghai Exchange to 69,000 yuan a ton, the highest since June 11.

Technical Breach

A breach of the $9800 barrier on Thursday boosting technical purchases on copper London contracts.

Copper is up 22% at the London Exchange compared to November 2023 lows at $8105.

In the US, Copper Comex futures rose 2.7% to $5.05 a pound, raising its premium over the London contract to $1277 a ton, the highest since April.

Such a premium is due to expectations of Trump tariffs on the metal.

As for Other metals:

Aluminum rose 0.5% in London to $2575 a ton

Lead rose 0.6% to $2044  

Nickel added 0.8% to $15,190

Zinc rose 1.4% to $2743

Tin rose 0.6% to $33400

Otherwise, the dollar index fell 0.5% as of 14:57 GMT to 97.1, with a session-high at 97.6, and a low at 97.00, the lowest in three years.

Copper futures rose 2.8% in American trade as of 14:54 GMT to $5.11 a pound.