Dollar Struggles Near Multi-Year Lows Amid Fed Dovishness and Trump's Spending Plan

Economic

Forex

Summary:

The U.S. dollar continues to hover near its lowest levels in over three years as markets respond to dovish cues from Fed Chair Jerome Powell and looming fiscal risks tied to President Trump’s $3.3 trillion tax-and-spending bill...

Dollar Under Pressure

The U.S. dollar index (DXY) edged up slightly to 96.677 in early Wednesday trading in Asia, but remained near its overnight low of 96.373—the weakest level since February 2022. The greenback's continued weakness reflects a confluence of factors, including growing expectations for Federal Reserve rate cuts and increased fiscal uncertainty under the Trump administration’s proposed legislation.

Against the euro, the dollar stayed near its weakest point since September 2021, while also trading at levels not seen since January 2015 against the Swiss franc. Sterling rose modestly to $1.37435, closing in on its October 2021 highs. Meanwhile, the dollar managed a mild rebound against the yen, up 0.1% to 143.59 yen, after a 0.4% decline in the previous session.

Fed Signaling Patience but Doesn’t Rule Out July Rate Cut

Fed Chair Jerome Powell’s speech at the ECB conference in Sintra continued to lean dovish. While Powell emphasized a “patient” approach to monetary easing, he notably did not eliminate the possibility of a rate cut in July, keeping the focus firmly on incoming economic data.

This puts Thursday’s U.S. non-farm payrolls report in the spotlight. A stronger-than-expected jobs number could temporarily ease rate cut expectations, though markets are still pricing in roughly 68 basis points of easing by year-end, and 135 bps by October 2026, according to LSEG data.

Overnight, the JOLTS job openings data showed unexpected labor market resilience, providing a modest lift to the dollar from its lowest levels but not enough to reverse the broader downward trend.

Trump’s Spending Bill Adds to Dollar Weakness

Beyond monetary policy, the dollar’s weakness is being compounded by concerns over Trump’s $3.3 trillion tax-and-spending bill, which has cleared the Senate and is heading back to the House for final approval. Analysts fear that the bill will dramatically increase U.S. Treasury issuance, adding pressure to bond yields and undermining long-term confidence in U.S. fiscal discipline.

Rodrigo Catril of National Australia Bank summarized market sentiment, stating, “An increase in government spending well beyond its means is not necessarily good news for the Treasury market... one of the reasons the dollar’s going down.”

Fed Independence Questioned as Trump Intensifies Attacks

Another layer of volatility stems from growing concerns over the Federal Reserve’s autonomy. President Trump’s latest public critique of Powell—this time via a handwritten note comparing global central bank rates and urging lower U.S. rates—has reignited fears that political interference could damage market confidence in the Fed’s policy credibility.

Trump’s note reportedly said the U.S. rate should fall between Japan’s 0.5% and Denmark’s 1.75%, with a jab at Powell for being “as usual, too late.” This unusual and personal pressure on the Fed Chair is viewed by many as undermining the institution’s independence, adding further downside to the dollar outlook.

Outlook

With downward pressure from both macroeconomic and political sources, the U.S. dollar appears set to remain subdued in the near term. Upcoming data, particularly Thursday’s payrolls report, could introduce volatility, but markets are likely to remain cautious as long as rate cuts and fiscal expansion dominate the U.S. outlook.

If the Trump administration continues to pursue aggressive fiscal policies and applies public pressure on the Fed, the greenback may face further erosion, especially if global risk appetite holds and alternative currencies like the euro and franc remain strong.

Investors should remain cautious on long-dollar positions. EUR/USD could retest resistance around 1.1830 if jobs data disappoints, while USD/CHF risks deeper losses below 0.7870 if U.S. fiscal credibility deteriorates further. Risk-off triggers may offer only short-term dollar relief given the structural headwinds in place.

Source: Reuters

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Damon

Economic

Australia’s retail sales grew slightly below forecasts in May, as a decline in food spending offset a rebound in clothing purchases, though overall growth improved from the previous month.

Retail sales rose 0.2% month-on-month in May from a 0.1% decline in the prior month, but came in below expectations of a 0.3% growth, data from the Australian Bureau of Statistics showed on Wednesday.

Clothing, footwear, and personal accessory sales rose by 2.9%, while department store sales increased by 2.6% in May, with both sectors rebounding from sharp declines in April.

"‘Clothing retailers and department stores were boosted by people buying winter clothes, having held off on those purchases with the warmer-than-usual weather last month," Robert Ewing, ABS head of business statistics, said in a statement.

However, spending on food fell for the first time this year, driven by food retailing businesses.

Consumers appeared to tighten spending amid rising uncertainty from U.S. tariffs and concerns over the Australian economy.

A subdued retail spending figure supports bets of more interest rate cuts by the Reserve Bank of Australia. Markets widely expect the central bank to cut rates again at its July policy meeting.

Source: Investing

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Devin

Stocks

Nvidia stock is back in the market's good graces after plunging earlier this year. Despite reassurances from management, investors were worried about the company's future when China's DeepSeek chatbot came out and further concerned about impact of new tariffs. As Nvidia continues to report stellar earnings results and upgrade its technology amid a pause on many of the new tariffs, investors are feeling more love toward Nvidia stock.

As of this writing, Nvidia stock trades just north of $150, and it's back to beating the market. Can it reach $200 before the end of the year?

AI is a huge opportunity

Nvidia makes the semiconductor chips necessary to drive generative artificial intelligence (AI), or the apps that "think" and create. There are two basic stages to that process: training and inference. The large-language models that run the data and produce output need a tremendous amount of power for these processes, training on millions of data points that are constantly updated and running through tons of algorithms to create accurate content and images. Nvidia's chips make that happen.

Since so many tech companies want to use generative AI in their operations today, Nvidia's chips are in great demand. Although there are alternatives, Nvidia has between 70% and 95% of the market, depending on who you ask. Even at the lower end, that's a huge lead over the competition. As the gold standard, Nvidia is relied upon by the biggest companies like Microsoft and Amazon as a partner. This is where the greatest opportunity is. Amazon, for one, has its own line of budget options for smaller companies, but the large, brand-name clients it services need Nvidia's powerful chips.

The demand is only expected to increase. According to Statista, the AI opportunity is expected to increase at a compound annual growth rate of 26.6% over the next five years, reaching $1 trillion. A huge portion of that is likely to go to Nvidia.

Management continues to launch new products that can handle higher data loads, making them more attractive to clients. Its Blackwell technology, which launched last year to replace the Hopper architecture, is already moving into Blackwell Ultra, and management is planning to release a new range of chips next year under the Rubin name.

Nvidia is unstoppable

In the near term, Nvidia continues to report phenomenal results despite serious setbacks. U.S. regulations mean it can't ship its best chips to China, stymying progress in that market, and Nvidia took a hit to its earnings in the fiscal 2026 first quarter (ended April 27) related to a charge for orders it couldn't fulfill.

Yet the first-quarter results were outstanding. Revenue increased 69% year over year, and earnings per share (EPS) were up from $0.60 last year to $0.76 this year, inclusive of the one-time charge.

Management is guiding for growth to decelerate in the second quarter but remain high at a 50% increase year over year. Wall Street is looking for EPS of $1, up from $0.68 last year. For the full year, Wall Street is expecting $200 billion in revenue and $4.29 in EPS, up from $130 billion (a 54% increase) and $2.99 (a 43% increase) over last year.

The valuation can handle it

If the valuation remains constant, Nvidia stock will rise along with its earnings. If it rises 54% from where it started out this year, it will reach $212. If it rises 43%, it will reach $197. If nothing much changes and Nvidia meets Wall Street's expectations, the stock should surpass $200 by the end of the year.

However, Nvidia tends to beat expectations. If that happens, it could rise further. High-growth stocks can also carry higher valuations. If Nvidia's valuation rises, the price could also rise further. At the current price, Nvidia stock trades at a price-to-earnings ratio of 50 and a price-to-sales ratio of 26. Those aren't cheap numbers, but they're pretty reasonable for Nvidia's growth.

The likelihood is that Nvidia hits at least $200 before the end of the year, or shoots 27% higher than the price at the time of this writing.

Source: The Motley Fool

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Natalie Gordon

Political

Economic

• U.S. Senate passes Trump's tax bill with Vice President's tie-breaking vote.

• House of Representatives faces deadline for bill approval by July 4.

• Crypto market observant but no immediate reactions noted.

The U.S. Senate approved President Trump's tax and spending bill on July 1, local time, following a 51-50 vote where Vice President Vance broke the tie. The bill now awaits approval from the House before the July 4 deadline.

The Senate's Narrow Passage with Vice President's Decisive Vote

The Senate passed President Trump's tax cut and spending proposal with a vote split of 51-50. Vice President Vance's decisive vote showcased a tight partisan division. Reactions among senators were varied, with some Republican members opposing the bill alongside Democrats. Notably, Rand Paul remarked, "The big not so beautiful bill has passed."

Fiscal Moves Stir Market Speculation, Crypto Vigilant

Bitcoin (BTC) recently experienced a minor decline since July 1, 2025. CoinMarketCap data shows its current price at $105,713.29, with a market capitalization of $2.10 trillion. The 24-hour trading volume saw a modest gain of 6.73%. Its price over the last day decreased by 1.60%, though Bitcoin maintained a notable 27.18% rise over 90 days.

Coincu analysts suggest the current fiscal move may cause caution in crypto investments, potentially leading to shifts in BTC and ETH trading volumes. Long-term historical trends indicate macroeconomic uncertainty often influences market hedging behavior, yet the immediate response remains muted within cryptocurrency spheres.

Market Impacts and Future Outlook

Did you know? Historical tax policies in the U.S., like the 2017 Trump tax reform, often induced market rallies, including within the cryptocurrency sector, highlighting the interplay between fiscal decisions and investment behavior.

Speaker Mike Johnson is tasked with advancing the bill through the House to meet the holiday deadline, while crypto and financial markets watch for further cues.

Bitcoin(BTC), daily chart, screenshot on CoinMarketCap at 00:19 UTC on July 2, 2025.

Reactions among senators were varied, with some Republican members opposing the bill alongside Democrats. Notably, Rand Paul remarked, "The big not so beautiful bill has passed."

Source: CryptoSlate

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Olivia Brooks

Political

Palestinian-Israeli conflict

U.S. President Donald Trump said on Tuesday that Israel had agreed to the conditions needed for a 60-day ceasefire with Hamas in Gaza, and urged the Palestinian group to accept the deal.

Trump said his administration held a “long and productive meeting” with Israel on Gaza, with Israel agreeing to “the necessary conditions to finalize the 60-Day CEASEFIRE.”

“The Qataris and Egyptians, who have worked very hard to help bring Peace, will deliver this final proposal. I hope, for the good of the Middle East, that Hamas takes this Deal, because it will not get better — IT WILL ONLY GET WORSE,” Trump said in a post on Truth.Social.

Trump’s comments on Gaza come after his administration brokered a ceasefire between Israel and Iran, after seemingly wiping out Tehran’s nuclear facilities. The ceasefire ended 12 days of fighting and appeared to be holding as of Tuesday evening.

Israel and Hamas continued to clash over Gaza in recent weeks, with Jerusalem showing few signs of de-escalating its strikes against the Palestinian group.

A tenuous ceasefire between the two had failed to hold earlier this year, despite intervention and threats from Trump. The president had issued several ultimatums to Hamas to pause the fighting and release more hostages, in exchange for more aid to Gaza.

Earlier on Tuesday, Trump had expressed hope for an Israel-Hamas ceasefire by next week.

Source: Investing

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Manuel

Cryptocurrency

Ethereum developer Zak Cole is spearheading a new initiative called the Ethereum Community Foundation (ECF), which will primarily work to enhance the digital asset’s economic value.

The initiative was announced during the Ethereum Community Conference in Cannes, France.

Founded by Cole and a group of ecosystem supporters, the ECF has reportedly already raised “millions” and intends to allocate its treasury to projects that enforce immutability, avoid issuing new tokens, and implement mechanisms to burn Ethereum (ETH).

These requirements align with the foundation’s mission to reduce circulating ETH supply and strengthen the network’s monetary policy.

The ECF’s initial initiative, known as the Ethereum Validator Association (EVA), will give validators greater influence in protocol development by enabling them to signal preferences using their staked ETH.

The EVA will also invest in validator infrastructure to improve decentralization and network security.

Beyond validator initiatives, the ECF aims to fund real-world asset integrations that bring traditional financial instruments such as stocks, bonds, and real estate onto Ethereum’s blockchain. The foundation views these integrations as critical to institutional adoption, which it sees as a key driver of long-term network value.

Additionally, the ECF will prioritize funding for public goods that address technical challenges within the Ethereum ecosystem, including adjustments to mispriced blob space used in data availability layers.

Funding decisions will be governed by coin voting, allowing the broader Ethereum community to participate in determining grant allocations. The ECF has emphasized that all funding decisions, treasury movements, and project milestones will remain publicly transparent to ensure accountability and alignment with the community’s goals.

The launch of the ECF comes at a pivotal time for Ethereum, as the network undergoes a reorganization following executive changes at the Ethereum Foundation.

The ECF’s mandate extends to engaging with governments, regulators, and policymakers to promote Ethereum as a trusted institutional infrastructure layer. While specific backers of the foundation have not been publicly disclosed, further announcements regarding its supporters and upcoming funding rounds are expected in the coming weeks.

By focusing on projects that reinforce ETH’s economic integrity without introducing new tokens, the ECF is positioning itself as an alternative funding avenue within the ecosystem. It aims to complement but also differentiate from the Ethereum Foundation’s current priorities.

Source: Cryptoslate

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Olivia Brooks

Economic

Stocks

Political

China–U.S. Trade War

President Donald Trump said he is not considering delaying his July 9 deadline for higher tariffs to resume and renewed his threat to cut off talks and impose duty rates on several nations, including Japan.

“No, I’m not thinking about the pause,” Trump said Tuesday when asked whether he would extend the negotiating period with trading partners. “I’ll be writing letters to a lot of countries.”

US stocks pulled back after Trump’s comments to reporters aboard Air Force One. The S&P 500 Index quickly dropped 14 points on the headlines after trading was steady earlier in the day. The benchmark was down 0.1% as of 3:36 p.m. in New York. The Cboe VIX Index jumped above 16.8 before paring its advance.

A Bloomberg gauge of the dollar changed little after Trump’s remarks, while the yen held onto gains versus the US currency, outperforming all of its Group-of-10 peers.

Investors are closely watching how the president decides to handle the current pause on his April tariffs, which he put on hold for 90 days to allow time for talks.

Trump for weeks has sought to exert leverage over trading partners with threats to set high levies on governments he sees as being difficult. His top economic adviser, Kevin Hassett, a day earlier signaled agreements would be announced after the July 4 holiday and the signing of the tax and spending bill the US Senate approved.

Since the president put his country-by-country tariffs on hold, he and his team have repeatedly promised a flood of agreements that would rebalance trading relationships that he has long decried as unfair. But the only two such pacts thus far have been broad frameworks with the UK and China, which left several key issues unresolved and many specifics to be negotiated later.

The president on Tuesday deepened his criticism of Tokyo for not accepting US rice exports. He also said that auto trade between the two nations is imbalanced. Japan should be forced to “pay 30%, 35% or whatever the number is that we determine, because we also have a very big trade deficit with Japan,” Trump said.

Trump proposed a 24% tariff on Japanese goods in April. Those have been subject to a 10% charge during the negotiating period.

“I’m not sure we’re going to make a deal. I doubt it with Japan, they’re very tough. You have to understand, they’re very spoiled,” Trump said.

Earlier: India’s Foreign Minister Sees US Trade Deal as Possible in Days

The president sounded more optimistic about reaching a deal with India. When asked about the prospects for an agreement over the next week, Trump said: “possibly. That’s going to be a different kind of a deal.”

“It’s going to be a deal where we’re able to go in and compete. Right now, India doesn’t accept anybody in,” he said.” I think India is going to do that, and if they do that, we’re going to have a deal for much less tariffs.”

India’s foreign minister Subrahmanyam Jaishankar said this week his country is close to finalizing an agreement with the US, as they work through thorny issues including coming industry-specific tariffs and market access for genetically modified crops from America.

Talks have intensified, with India’s chief negotiator Rajesh Agarwal extending his stay in the US to iron out disagreements.

Other negotiations have proved even more difficult — and Trump has been keen this week to make an example out of Japan. That could be seen as a warning to other countries to get in line or face prohibitive tariffs. Yet the president also showed his penchant for quick reversals last week with Canada, initially cutting off talks but then restarting them days later after Ottawa scrapped a digital-services tax.

Japan’s efforts under Prime Minister Shigeru Ishiba to maintain a steady, friendly approach to negotiations have put to the test by Trump’s efforts to ramp up pressure for deals. Tokyo has pushed for relief for its crucial auto sector, as well as other tariff exceptions, but the deliberate approach risks backfiring as Trump looks for quick wins on trade.

“I love Japan. I really like the new prime minister,” Trump told reporters. “But they and others are so spoiled from having ripped us off for 30, 40, years that it’s really hard for them to make a deal.”