US Dollar Finds a Bottom as Fed Funds Stay Unchanged

Forex

Central Bank

Summary:

The US Dollar shows signs of stabilizing near the 99.00 level despite geopolitical tensions and rate uncertainty. It lags against Aussie and Kiwi, while markets await key Canadian retail sales data.

The weekly open had seen the US Dollar retreat but one ongoing theme is of an overdone US Dollar selling – With war headlines coming out by the minute, the Dollar Index has failed to break new lows and is making its way to the 99.00 pivot zone.This nice chart offered by Bank of America in their latest Global Funds Manager Survey shows how positioning is changing – Reminder that it’s more an opinion from the Funds Managers than numbers, as global exposure to USD assets is still massive.

US Dollar Finds a Bottom as Fed Funds Stay Unchanged_1

North American Equity Indices Snapshot

US Dollar Finds a Bottom as Fed Funds Stay Unchanged_2

North American Indices have held strong and are up since last Monday with the Nasdaq leading, closely followed by the S&P 500.

Anxious market sentiment doesn’t always transfer to negative index performance.

One potential headwind is a potential entry from the US in the Iran-Israel conflict that seems to be closer from materializing.

US Dollar Mid-Week Performance vs Majors

The Greenback has held strongly against the GBP and risk-off currencies lagging the most on the week – Another proof of market anxiety not materializing in proper demand for Safe-Haven Assets.

The Dollar has however lagged against the Aussie and the Kiwi for a third straight week as prospects for US-China trade deals enhances the outlook for both exporting nations.

Dollar Index 4H Chart

The DXY is currently close to the 99.00 psychological level, and fully corrected from the FOMC Rate Decision downward move.

Canadian Dollar Mid-Week Performance vs Majors

US Dollar Finds a Bottom as Fed Funds Stay Unchanged_5

The Loonie has held a decent performance throughout the beginning of the week, only lagging against the Australian Dollar and the USD which is getting backed from the geopolitical developments.

Bank of Canada Governor Tiff Macklem spoke yesterday about a better outlook on the US Trade conflicts and how important it is to the economy – this hasn’t moved the CAD too much.

Intraday Technical Levels for the USD/CAD

US Dollar Finds a Bottom as Fed Funds Stay Unchanged_6

USD/CAD is breaking out of the descending channel formed throughout the latter part of May which brought the currency to fresh lows for the year.

Prices are supported by the 4H 50-period moving average and the move up looks like it has the potential to retest the 1.38 Resistance Zone that coincides with the 4H MA 200 (currently standing at 1.3789).

In the meantime, buyers are eyeing the 1.3740 Immediate Resistance zone.

The seller would be looking to re-enter the channel, a move that can only be done by re-crossing the MA 50 standing at 1.3650.

US and Canada Economic Calendar for the Rest of the Week

The rest of the week will focus mostly on Canadian data, with the highest-tier data being the Canadian Retail Sales, coming up on Friday with +0.5% m/m expected.

Source: investing

Risk Warnings and Disclaimers

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Michelle

Economic

Cryptocurrency

U.S. House Plans Merger for Crypto Bills by August

The U.S. House of Representatives is working to combine the CLARITY and GENIUS bills, aiming to pass them before August 2025.

The merger could set a precedent for stablecoin regulation, impacting the financial market and boosting institutional adoption.

The CLARITY and GENIUS bills represent significant legislative moves to clarify the regulatory landscape for stablecoins. Spearheaded by Senator Bill Hagerty, the GENIUS Act gains support from bipartisan legislators, including Senators Kirsten Gillibrand and Cynthia Lummis. The U.S. House plans to merge these with its CLARITY Act to advance regulatory certainty for digital currencies.

The intended legislation addresses stablecoin backing requirements with liquid assets. If successful, it can enhance institutional confidence and adoption rates. The total stablecoin market has already grown by 55% reaching $251 billion, underscoring the market's robust expansion.

This regulatory effort is central to stabilizing the U.S. crypto environment, potentially driving stablecoin issuance by major corporations such as Walmart and Amazon. Such moves might impact both the regulatory frameworks and financial markets.

"With the GENIUS Act, we’re bringing clarity to a sector that’s been clouded by uncertainty and proving that bipartisan, principled leadership can still deliver real results for the American people. This did not happen by accident. It happened because we led – across the aisle and with purpose. I’m especially grateful to Senator Hagerty for his leadership, as well as the hard work of many of my colleagues to get this across the finish line." — Tim Scott, Chairman, Senate Banking Committee

Potential outcomes include increased value locked (TVL) in stablecoin pools and fresh staking flows from institutional sources. Although Bitcoin and Ethereum remain unaffected, their surrounding ecosystems could benefit from clearer rules and greater liquidity. The merger of the CLARITY and GENIUS bills reflects evolving U.S. policy intent to foster a more stable financial digital economy.

Source: CryptoSlate

To stay updated on all economic events of today, please check out our Economic calendar

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Adam

Economic

The Bank of England kept its main interest rate at the two-year low of 4.25% on Thursday as fears grow that the conflict between Israel and Iran will escalate.

The decision by the bank’s nine-member Monetary Policy Committee was widely anticipated. Six of the members voted to keep rates unchanged while three backed a quarter-point reduction.

With U.K. inflation at 3.4% — the bank’s target rate is 2% — policymakers were mindful of how the conflict in the Middle East will impact on oil prices, which have risen sharply in recent days to over $75 a barrel.

The prevailing view at the bank was that inflation would remain high over the coming months but start to head back towards next year. The uptick in oil prices has the potential to scupper that expectation.

“The world is highly unpredictable," bank governor Andrew Bailey said.

Uncertainty over the level of tariffs U.S. President Donald Trump will impose around the world is also clouding the outlook for prices around the world. Though the U.K. looks like it will be spared a raft of tariffs, the backdrop for the global economy remains highly uncertain.

The tariff issue is at the forefront of concerns at the U.S. Federal Reserve, which on Wednesday kept its key rate unchanged, to the chagrin of Trump, who has been urging the central bank to join others, such as the Bank of England and European Central Bank, and cut borrowing costs.

Since its first quarter-point rate cut last August from the 16-year high of 5.25%, the Bank of England has played it steady, reducing interest rates every three months. That would mean the next reduction is in August.

source : finance.yahoo

To stay updated on all economic events of today, please check out our Economic calendar

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Adam

Stocks

Middle East Situation

Equities fell as growing speculation that the US will directly support Israel in its war against Iran fueled geopolitical uncertainty and concerns about the inflationary impact of higher crude prices.

Listen to the Stock Movers podcast on Apple, Spotify or anywhere you listen.

Europe’s Stoxx 600 index retreated 0.4%, setting the gauge on course for a third day of losses. Asian shares dropped more than 1%. S&P 500 futures also fell on a day when cash trading in US stocks and Treasuries is closed for a holiday.

Brent crude rose above $77 a barrel, extending gains in a week where market reaction to the conflict in the Middle East has been most concentrated in oil. The dollar also edged higher against a basket of currencies.

Traders’ sentiment turned more cautious after Bloomberg reported that senior US officials are preparing for a possible strike on Iran in the coming days. Markets were already on edge after the Federal Reserve downgraded its estimates for growth this year and projected higher inflation.

“If the US does strike, you’re going to see a big knee-jerk reaction,” said Neil Wilson, investor strategist at Saxo UK. “No one will be wanting to make big long bets.”

Trump has for days publicly mused about calling for a strike on Iran. He told reporters at the White House Wednesday that he prefers to make the “final decision one second before it’s due” because the situation in the Middle East is fluid.

The odds for the US to become involved are “quite high at this moment in time,” said Anna Rosenberg, head of geopolitics at Amundi Investment Institute.

“For the US, this is a moment to take out a big geopolitical headache, which is Iran potentially developing a nuclear weapon,” Rosenberg told Bloomberg TV. “Having said that, acting comes with a lot of consequences too. Trump will have to make a really difficult decision.”

Among a flurry of monetary policy decisions across Europe, the Bank of England kept its benchmark rate on hold at 4.25%. While the decision was in line with expectations, more committee members than economists had anticipated voted for a cut. The pound fell.

Earlier, the Swiss National Bank cut its interest rate to zero as policymakers sought to deter investors from pushing up the franc, which has gained almost 10% against the dollar so far this year.

Norway’s central bank surprised with its first post-pandemic reduction of borrowing costs, with officials signaling inflation has been sufficiently tamed to ease constriction even more this year. The krone slid.

On Wednesday, the Fed voted unanimously to hold its benchmark rate. Chair Jerome Powell noted that increases in tariffs are likely to boost prices and added that the effects on inflation could be more persistent. While the median expectation for two rate cuts in 2025 didn’t change, a number of officials lowered their projections.

source : Bloomberg

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Adam

Stocks

Stocks Stall as Fed, Geopolitics Inject Uncertainty

U.S. equities closed narrowly mixed on Wednesday as traders reacted to the Federal Reserve’s June policy update and geopolitical headlines out of the Middle East. The Dow Jones Industrial Average slipped 44.14 points, or 0.10%, to 42,171.67. The S&P 500 Index edged lower by 0.03% to 5,980.87, while the Nasdaq Composite managed a 0.13% gain to finish at 19,546.27.

Investors had largely priced in a rate hold going into the session, but lingering inflation concerns and warnings about economic growth left markets in a wait-and-see mode. Risk appetite remains cautious amid rising tensions between the U.S. and Iran and ongoing tariff-driven economic uncertainty.

The U.S. cash equity markets are closed today in observance of the Juneteenth National Independence Day holiday.

Soft Patch in Data Strengthens Case for Caution

Recent data reflects mounting evidence of economic softening:

Initial jobless claims fell to 245,000 but remain at an elevated four-week average, the highest since August 2023

Retail sales excluding gasoline declined 0.8% in May, led by a pullback in vehicle purchases following tariff-related front-loading

Housing starts dropped 9.8%, with multifamily down 29.7% and single-family permits falling 2.7%

NAHB Builder Confidence Index slipped to 32 in June, marking the fourth decline in five months

These data points support the Fed’s more cautious tone and reinforce concerns that tariffs, high interest rates, and slowing domestic demand may further restrain growth into Q3.

Fed Holds Fire but Flags Inflation Risks From Tariffs

The Federal Reserve held the federal funds rate steady at 4.25%–4.50% on Wednesday, as expected. However, the Summary of Economic Projections reflected a modestly stagflationary tone:

2025 GDP forecast downgraded to 1.4%

Core PCE inflation raised to 3.1%

Median projection shows two rate cuts by year-end

Chair Jerome Powell emphasized uncertainty around the inflationary effects of tariffs, noting the Fed is “well positioned to wait” for further data. He added that the size and duration of the tariff impact remain unclear.

Markets interpreted the messaging as cautious but still leaning dovish. Futures pricing now shows a 60% probability of a 25-basis-point cut in September, up from 53% the day before.

Index Levels Reveal Shifting Short-Term Sentiment

Daily Dow Jones Industrial Average Index

Dow Jones Industrial Average: Wednesday’s close below the 50-day SMA at 42,518.52 signals loss of near-term momentum. The next area of interest lies at the 200-day SMA at 41,368.20, followed by key support near 40,564.16.

The Day Ahead: Stocks Pause as Fed Flags Tariff Uncertainty and Growth Risks_2

Daily Nasdaq Composite Index (IXIC)

Nasdaq Composite: Price action remains firm with Wednesday’s close at 19,546.27, well above the 50-day and 200-day SMAs at 18,252.70 and 18,585.68. Traders are watching 19,800.46 for breakout confirmation.

The Day Ahead: Stocks Pause as Fed Flags Tariff Uncertainty and Growth Risks_3

Daily S&P 500 Index

S&P 500 Index: The index is consolidating after a strong run. Wednesday’s 5,980.87 close holds comfortably above the 50-day SMA at 5,717.10 and the 200-day SMA at 5,812.52. Immediate support is seen near 5,913.40, while resistance remains at the recent swing high of 6,059.40.

Markets Look for Clarity in Data and Diplomacy

With the Fed decision and press conference in the rearview, traders will focus on geopolitical risks and upcoming inflation data, particularly the PCE Price Index due next week. Markets appear range-bound heading into the weekend, but underlying volatility remains elevated. Equity direction will depend on whether incoming data confirms the Fed’s cautious stance or shifts expectations again.

Source: fxempire

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Glendon

Commodity

Middle East crude benchmarks Oman, Dubai and Murban extended gains to above $3 a barrel, hitting their highest levels in four months as fighting between Israel and Iran intensified, raising concerns about supply disruption in the Gulf.

Trade on the Dubai Platts window thinned, with just one deal concluded.

More details emerged for QatarEnergy tenders for August-loading crude. The producer has awarded Qatar Land to Vitol and Qatar Marine to Reliance, traders said.

For regional oil, Petronas has sold August-loading Labuan crude to PTT at $8 a barrel above dated Brent.

SINGAPORE CASH DEALS

Cash Dubai's premium to swaps rose 65 cents to $3.34 a barrel.

SELLER-BUYER	PRICE ($/BBL)
HENGLI-MERCURIA	76.90

PRICES ($/BBL)

	CURRENT	PREV SESSION
GME OMAN	76.91	75.71
GME OMAN DIFF TO DUBAI	3.51	3.25
CASH DUBAI	76.90	75.52

NEWS

Israel struck a key Iranian nuclear site on Thursday and Iranian missiles hit an Israeli hospital, as President Donald Trump kept the world guessing about whether the U.S. would join Israel in airstrikes seeking to destroy Tehran's nuclear facilities.

U.S. oil major Chevronhas sought non-binding bids for the sale of its 50% stake in Singapore Refining Company (SRC), including from joint venture partner PetroChina, eight sources familiar with the matter told Reuters.

Russia, the United States and Saudi Arabia could act jointly to stabilise oil markets if needed, Russia's investment envoy Kirill Dmitriev told Reuters.

Commercial ships are sailing close to Oman and are being advised by maritime agencies to avoid Iran's waters around the Strait of Hormuz, with the risk of the conflict between Israel and Iran escalating, shipping sources said on Wednesday.

U.S. crude oil stockpiles fell sharply last week, posting their largest decline in a year, while gasoline and distillate inventories rose, the Energy Information Administration said on Wednesday.

Source: TradingView

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Michelle

Economic

Forex

The U.S. dollar edged higher Thursday, buoyed by safe-haven demand as the Middle East conflict threatens to escalate in the wake of the latest Federal Reserve policy meeting.

At 04:25 ET (08:25 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, rose 0.1% to 98.585, on course for a 0.9% gain for the week, its strongest weekly performance since late January.

Dollar helped by safe haven status

Israel and Iran exchanged fresh air bombardments on Thursday, as speculation mounts that President Donald Trump is set to bring the U.S. into the conflict between the two countries, which is now entering its seventh day of fighting.

Trump told reporters on Wednesday that "nobody knows what I’m going to do" about the U.S. possibly entering the conflict. He suggested that Iranian officials wanted to come to Washington for negotiations, but flagged that "it’s a little late" for these talks.

“The combination of geopolitical risks and high oil prices is not US-induced risks, and therefore the dollar is still in a more favourable spot than the energy-dependent safe-haven alternatives (like the euro) in this environment,” said analysts at ING, in a note.

“Upside risks for USD persist.”

The Federal Reserve held rates steady on Wednesday, as expected, but Chair Jerome Powell also warned of inflation risks, saying the price of goods will pick up over the course of the summer as Trump’s tariffs start to impact consumers.

“And while keeping two rate cuts in the 2025 median projection may seem moderately dovish, the Fed sounded less concerned about growth and unemployment,” ING added.

Euro heads for weekly decline

In Europe, EUR/USD fell 0.2% to 1.1465, with the single currency hitting a one-week low earlier in the session, and was heading for its biggest weekly decline since February.

The euro has seen selling on the back of the heightened geopolitical tensions.

“Our view is that EUR/USD can probably correct a bit further from here on geopolitical risks. Our near-term target is 1.140, and explorations below that level can be justified even without new big spikes in oil prices,” said ING.

“That said, geopolitical events tend to be temporary drivers for FX unless they trigger long-lasting effects on commodity prices (like the Russia-Ukraine war). So, we still think there will be plenty of interest in buying the EUR/USD dips at the first signs of de-escalation.”

GBP/USD dropped 0.1% to 1.3410, ahead of a Bank of England policy meeting later in the session.

The BoE is widely expected to keep rates on hold having lowered rates by a quarter point to 4.25% in early May, and thus investors will be waiting to see how policymakers voted and for any guidance on the rate cut trajectory.

“There could be more than one dissenter voting for a cut, but the overall guidance should remain broadly unchanged, roughly endorsing market expectations for two more cuts by year-end,” ING added.

USD/CHF rose 0.1% to 0.8185 after the Swiss National Bank cut interest rates by 25 basis points to 0%, creating the future possibility of a return to negative rates.

“Inflationary pressure has decreased compared to the previous quarter. With today’s easing of monetary policy, the SNB is countering the lower inflationary pressure,” the central bank said in a statement.

PBOC meeting due

In Asia, USD/JPY traded 0.1% higher to 145.31, with the Japanese yen seeing limited safe haven demand, while USD/CNY was largely unchanged at 7.1912, ahead of a meeting of the People’s Bank of China later in the week.

AUD/USD fell 0.6% to 0.6473, with the Australian dollar after data showed an unexpected deterioration in the country’s labor market in May.