Silicon Gains, Central Bank Strains

Stocks

Summary:

Wall Street climbed as Micron's strong earnings boosted semiconductor stocks, but concerns rose over Trump possibly replacing Fed Chair Powell early, raising fears of politicized monetary policy and inflation risks.

Wall Street woke up on Thursday to the scent of euphoria, as stock futures ticked upward on the back of a surging semiconductor sector. Micron Technology, often a backstage hand in the glitzy world of AI innovation, delivered a stellar earnings report that did more than lift its own shares by over 2.3%. It ignited a broader rally in chipmakers, a class of stocks now carrying the burden of national hopes, technological sovereignty, and market momentum. Nvidia touched yet another record. The Nasdaq hovered within whispering distance of its all-time high.

Yet, even as investors bask in the glow of AI's promise, a darker and more politically charged narrative simmers beneath the surface. Micron's success - and the sector-wide enthusiasm it inspired - coincides with increasingly chaotic signals from Washington, where President Donald Trump is reportedly considering announcing Jerome Powell's replacement months before the end of the Fed Chair's term. It's a move that has financial observers scrambling for their civics textbooks and central bankers revisiting their oaths of independence.

The Wall Street Journal reported that Donald Trump intends to name Powell's successor as soon as possible (probably by October, given that his term ends in May 2026). The aim is to send a message and put pressure on the current Fed chairman, who is considered too unruly. Kevin Warsh, Kevin Hassett, and Scott Bessent (who had already declined, I believe) are among the candidates being considered by the White House. The WSJ specifies that the US president is evaluating candidates based on their commitment to lowering rates and, I quote, their "made-for-TV" appeal.

Micron's earnings might reflect AI exuberance, but the rest of the macroeconomic picture is less rosy. Traders, clinging to Powell's careful rhetoric before Congress, still price in multiple rate cuts by year's end - an acknowledgment that despite robust corporate profits, the broader economy walks a tightrope between resilience and stagnation. Durable goods data and the final first-quarter GDP estimate - released this morning - offered clues. In a disquieting signal for the U.S. economy, goods exports in May fell by 5.2% month-over-month - the sharpest decline since the early pandemic turmoil of 2020. The steep drop suggests a weakening in global demand or a growing drag from trade tensions and tariffs, raising fresh concerns about the resilience of American manufacturing amid geopolitical uncertainty. Meanwhile, weekly jobless claims came in at 236,000 for the week ending June 21, slightly below economists’ expectations of 243,000, offering a sliver of reassurance that the labor market remains relatively stable.

But the real tell will be Friday's release of the Personal Consumption Expenditures report, the Fed's preferred inflation gauge, now shadowed by tariff threats and growing geopolitical unpredictability.

The market's early morning climb appears to be powered by a paradox. On one side is the dazzling optimism of AI and on the other, the creeping realization that monetary policy may become a political football in a high-stakes election year. If Trump's rumored nomination of a dovish Fed successor becomes reality, it could upend the Fed's credibility and further weaken the already-sliding dollar, which just hit a three-year low.

This confluence of events presents an unsettling picture. The same investors cheering Micron's forecast are also hedging against future inflation, recalibrating bond strategies, and squinting at the Fed with suspicion. Treasury yields are falling - but not too far.

In the background, subtle but telling corporate shifts are taking place. Meta poached three researchers from OpenAI, a reminder that in the world of AI, talent is the true currency. Coinbase, a once-embattled crypto platform, reached its highest close since 2022. Shell and BP plc sparked merger rumors, underlining the strategic reshuffling across industries, although it was denied by the parties. And Nike, bracing for what analysts call an “ugly” quarter, still managed to lift its stock ahead of earnings..

In other news, the US has managed to get other NATO members to pay more. Everyone congratulated each other yesterday, especially since Washington has tipped the balance back in Ukraine's favor in the conflict with Russia.

In Asia-Pacific markets, the picture is very mixed. Indices went from a 1.1% decline in South Korea, where the strength of US semiconductors has not spread, to a 1.5% gain in Japan. Australia and Hong Kong were down slightly, while India gained some ground. European leading indicators are bullish, with the Stoxx Europe 600 up 0.2%.

Source : marketscreener

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Michelle

Political

Middle East Situation

Iran would respond to any future U.S. attack by striking American military bases in the Middle East, Supreme Leader Ayatollah Ali Khamenei said on Thursday, in his first televised remarks since a ceasefire was reached between Iran and Israel.

Khamenei, 86, claimed victory after 12 days of war, culminating in an Iranian attack on the largest U.S. base in the region, located in Qatar, after Washington joined the Israeli strikes.

"The Islamic Republic slapped America in the face. It attacked one of the important American bases in the region," Khamenei said.

As in his last comments, released more than a week ago during the Israeli bombardment, he spoke from an undisclosed indoor location in front of a brown curtain, between an Iranian flag and a portrait of his predecessor Ruhollah Khomeini.

IRAN WILL NOT SURRENDER

In his pre-recorded remarks, aired on state television, Khamenei promised that Iran would not surrender despite U.S. President Donald Trump's calls.

"The U.S. President Trump unveiled the truth and made it clear that Americans won't be satisfied with anything less than surrender... such an event will never happen," Khamenei said.

"The fact that the Islamic Republic has access to important American centres in the region and can take action against them whenever it deems necessary is not a small incident, it is a major incident, and this incident can be repeated in the future if an attack is made," he added.

Trump said "sure" on Wednesday when asked if the United States would strike again if Iran rebuilt its nuclear enrichment programme.

Tehran has for decades denied accusations by Western leaders that it is seeking nuclear arms.

NO GAIN

Khamenei said the U.S. "gained no achievement" after it attacked Iranian nuclear sites, but that it entered the war to "save" Israel after Tehran's missiles broke through Israel's multi-layered defence system.

"The U.S. directly entered the war as it felt that if it did not get involved, the Zionist regime (Israel) would be fully destroyed. It entered the war to save it," he said.

"The U.S. attacked our nuclear facilities, but couldn't do any important deed... The U.S. president did abnormal showmanship and needed to do so," he added.

Trump said over the weekend that the U.S. deployment of 30,000-pound bombs had "obliterated" Iran's nuclear programme. However, this appeared to be contradicted by an initial assessment from one of his administration's intelligence agencies, according to three people familiar with the matter.

Israel's Prime Minister Benjamin Netanyahu also declared "a historic victory" on Tuesday, after the fragile ceasefire took effect, saying Israel had achieved its goal of removing Tehran's nuclear and ballistic missile threat.

Shortly after Khamenei's speech, Netanyahu posted a message with a picture of himself and Trump holding hands with the message: "We will continue to work together to defeat our common enemies."

Source: Reuters

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Adam

Commodity

Gold and silver prices are firmer in early U.S. trading Thursday, supported by a wilting U.S. dollar index that overnight hit a 3.5-year low. Precious metals gains are modest, however, as tensions in the middle east have significantly de-escalated this week. August gold was last up $6.00 at $3,348.40. July silver prices were last up $0.374 at $36.485.

Asian and European stocks were mixed to firmer overnight. U.S. stock indexes are pointed to firmer openings today in New York. Risk aversion has receded this week but trader/investor risk appetite is not robust, either. The Israel-Iran ceasefire appears to be holding.

President Trump on Wednesday slammed Fed Chairman Jerome Powell and said he has a few people in mind to replace him when his term expires next year. Reads a Barron’s headline today: “Trump may name next Fed chair early. Why it would fuel inflation and tank the dollar.” The headline suggests Trump’s new Fed chair pick would be very easy on monetary policy, which could prompt inflation and further depreciate the greenback.

The key outside markets today see the U.S. dollar index lower and hitting a 3.5-year low. Nymex crude oil futures prices are slightly up and trading around $65.25 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently at 4.27%.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the Chicago Fed national activity index, the third estimate of first-quarter GDP, including the price indexes, durable goods orders, the advance economic indicators, pending home sales, and the Kansas City Fed manufacturing survey.

Gold price slightly up as U.S. dollar index slumps_1

Technically, August gold futures bulls have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at the June high of $3,476.30. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $3,300.00. First resistance is seen at Tuesday’s high of $3,385.00 and then at $3,400.00. First support is seen at Wednesday’s low of $3,325,50 and then at this week’s low of $3,308.30. Wyckoff's Market Rating: 6.5.

Gold price slightly up as U.S. dollar index slumps_2

July silver futures bulls have the firm overall near-term technical advantage. Silver bulls' next upside price objective is closing prices above solid technical resistance at the June high of $37.405. The next downside price objective for the bears is closing prices below solid support at $35.00. First resistance is seen at the overnight high of $36.77 and then at $37.00. Next support is seen at $36.00 and then at Wednesday’s low of $35.63. Wyckoff's Market Rating: 7.0.

Kitco: source

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Adam

Bond

The dollar fell and US Treasuries rallied after a report that President Donald Trump is considering naming Federal Reserve Chair Jerome Powell’s successor well before the incumbent’s term is scheduled to end next May.

The Wall Street Journal said Trump may reveal his pick to run the Fed by September or October. The report follows weeks of lobbying by the president for Powell to lower borrowing costs.

Investors and analysts reckon Powell’s replacement will most likely share the president’s dovish bias, prompting speculation interest rates could eventually fall faster and deeper than markets are currently pricing. An early selection could also confuse markets by forcing them to monitor the monetary policy commentaries of Powell and his replacement.

“This increases the risk that Powell will become a ‘lame duck’ in his final months as Fed chair, and with it the risk of earlier interest rate cuts,” said Michael Pfister, an FX analyst at Commerzbank AG.

Treasuries Rally, Dollar Slumps as Trump Eyes Powell Successor_1

Potential contenders to succeed Powell include former Fed Governor Kevin Warsh, current Fed Governor Christopher Waller, National Economic Council Director Kevin Hassett, former World Bank President David Malpass and US Treasury Secretary Scott Bessent, Bloomberg News has previously reported.

Traders have been adding to bets on more US interest-rate cuts in the past days, as Fed officials including Waller and Michelle Bowman, two Trump nominees, appeared to support a move as early as July. The chance of a quarter-point cut in the next meeting rose from zero to 20% and the amount of easing expected by the end of the year jumped from 50 to 62 basis points in a week.

Last week, US rates traders amassed a record futures bet that whomever Trump appoints will lead the central bank to cut interest rates almost immediately. Two-year yields — the most sensitive to changes in monetary policy — fell almost 20 basis points over the past week to trade at 3.75% on Thursday, a seven-week low.

Wagers on lower interest rates are also weighing on the dollar, which weakened against all of its Group-of-10 peers. The Bloomberg’s Dollar Spot Index slumped 0.6% to the weakest level in over three years. Commerzbank’s Pfister forecasts the euro could climb to $1.18 in the coming days if policymakers continue to shift to favor earlier rate cuts.

“Powell continues to attract the heat of the Trump administration,” said Franceso Pesole, a currency strategist at ING. Now that other Fed officials “are openly disagreeing with his cautious stance, markets may well be quick to respond with a dovish re-rating of expectations to soft US data.”

Investors will get further evidence on the health of the US economy on Thursday, with jobless claims, durable goods orders, home sales and final first-quarter growth figures. Fed officials including Austan Goolsbee, Tom Barkin, Mary Daly, Beth Hammack and Michael Barr, are also set to speak.

Powell reiterated his message that officials need not rush to lower rates during his testimony before the Senate Banking Committee this week. He said recent economic data is backward looking and many economists expect “a meaningful increase in inflation” over the course of this year due to tariffs.

“Trump’s actual behavior in terms of appointments to the Fed has been reasonably orthodox,” Simon Dangoor, head of fixed income macro strategies at Goldman Sachs Asset Management, said in comments prior to the WSJ report. “He of course appointed Powell himself. So one needs to be a little careful about taking all of the rhetoric at face value.”

What Bloomberg Strategists Say...

“The suggestion that Washington is seeking to assert more control over monetary policy could threaten the perceived independence of the US central bank. That won’t do much to improve the appeal of US assets. We are also approaching a seasonally weak period for the dollar. Since 2005, July has tended to be the weakest month for the Bloomberg Dollar Spot Index with an average decline of 0.6%.”

Conor Cooper, Macro Squawk. Click here for the full piece.

Still, traders in the currency options market have been ramping up bets that the dollar’s slide has room to run. One-month risk reversals — a key gauge of sentiment — swung sharply in favor of further downside this week. It was the ninth-largest bearish repricing in greenback options on record over a three-day window.

“Naming a ‘shadow’ Fed Chair is dollar-negative as it risks undermining the Fed’s credibility,” said Elias Haddad, a strategist at Brown Brothers Harriman & Co. “Conflicting signals between the official Chair and a perceived ‘shadow’ figure will increase market confusion, lead to mixed policy expectations, and erode the Fed’s image as a non-partisan institution.”

source :Bloomberg

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Blue River

Technical Analysis

USDCHF technicals

The USDCHF is extending its declines for 2025, with the price now breaking to fresh 2025 lows below the key 0.8032 low from April. The move lower marks a significant technical development as it takes the price to the lowest level since 2011.

The USD is lower today as the market reacts to the news that the Pres. Trump will announce a successor to Fed's Powell over the next few months and the independence of the Fed would be compromised.

Going back in time on the weekly chart above, the bearish trend was set in motion after the January 2025 high stalled near multiple key technical zones:

The 2024 and October 2023 highs
The 50% retracement of the decline from the 2022 high

Since then, sellers have remained in control, pushing the pair below multiple support levels. In April the price fell below the floor between 0.8333 to 0.8373. However, after falling to the April 2025 low at 0.80325, the pair bounced - moving back above the old floor in May (above 0.8333 to 0.8373).

However, that bounce higher was short-lived, and the move lower was restarted in the very next week.

Since, then the price action has been decidedly more bearish with the break to new 2025 lows today at 0.80325. That level is now a close short-term risk level for sellers. Staying below it, and the door remains wide open for more downside probing. The current price is trading at 0.7993.

Source: ForexLive

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Adam

Economic

The three main indices in the United States all look positive from a longer-term perspective, and as we go into the Thursday session, it is likely that there are going to be buyers willing to participate yet again.

NASDAQ 100 Technical Analysis

The NASDAQ 100 rallied a bit during the trading session in early trading, as we are now breaking to fresh new highs. So, with that being said, a short-term pullback is more likely than not going to be a buying opportunity, perhaps all the way down to the 22,000 level. At this point, we broke higher, and screamed to the upside. And with this being the case, I don’t see any other choice but to be bullish at this point. Although it is worth noting that volume is a little lighter than it had been, quite frankly, this recovery has been far too much to fight.

Dow Jones 30 Technical Analysis

The Dow Jones 30 is looking to break out as well and perhaps go looking to the 43,500 level. The 42,900 level has been supportive over the last couple of days, and I think we continue to see a lot of upward momentum. Short-term pullbacks, again, I think, offer plenty of value here in the Dow Jones 30, which I believe has some catching up to do with some of the other indices.

S&P 500 Technical Analysis

The S&P 500 has rallied as well in the early hours, and it looks like we are going to do everything we can to reach the 6,150 level, which is a major swing high and all-time high. If we can break above there, then I think the S&P 500 really takes off and probably goes looking to the 6,300 level based on the measured move from previous trading before all of that tariff sell off. Regardless, this looks like a market that, if it drops, you have to be a buyer looking for value.

Source: fxempire

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

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Michelle

Economic

The International Monetary Fund has revised Saudi Arabia’s economic growth upwards amid the unwinding of production cuts by Opec+ members.

The Arab world’s largest economy is forecast to grow 3.5 per cent this year, up from a previous projection of 3 per cent in April, and 3.9 per cent in 2026, an upward revision of 0.2 percentage points from the last prediction.

“Saudi Arabia’s economy has demonstrated strong resilience to shocks, with non-oil economic activities expanding, inflation contained, and unemployment reaching record-low levels,” the IMF said on Thursday.

Saudi Arabia is focusing on diversifying its economy away from oil with an emphasis on the development of sectors such as technology, property, tourism and infrastructure as part of Vision 2030.

The kingdom is supporting the development of several industries spanning different sectors to generate employment and help its non-oil economy to grow.

The country's non-oil economy is expected to grow by 3.4 per cent in 2025, after recording a 4.2 per cent growth last year after “the continued implementation of Vision 2030 projects through public and private investment, as well as strong credit growth, which would help sustain domestic demand and mitigate the impact of lower oil prices”, the Washington-based lender said.

Oil prices have remained volatile amid a number of events including the introduction of tariffs by Donald Trump, US-Iran nuclear talks and the conflict between Iran and Israel that ended earlier this week.

Unwinding of production cuts by Opec+ members including Saudi Arabia and Russia have also been affecting oil prices. Last month, Opec+ agreed to increase its monthly oil output at 411,000 barrels per day for July, following similar levels for May and this month.

“Over the medium term, domestic demand – including momentum ahead of Saudi Arabia’s hosting of large-scale international events – is expected to push non-oil growth closer to 4 per cent in 2027 before stabilising at 3.5 per cent by 2030,” the IMF said.

Saudi Arabia is set to host two major global events, Expo 2030 and Fifa World Cup in 2034.

The direct impact of rising global trade tension amid Trump tariffs is also expected to be limited on Saudi Arabia as oil products – comprising 78 per cent of Saudi Arabia’s goods exports to the US in 2024 – are exempt from US tariffs, while non-oil exports account for only 3.4 per cent of the kingdom’s total non-oil exports, the lender said.

In April, US President Donald Trump levied an import tariff of 10 per cent on all Gulf countries.

Saudi Arabia’s inflation levels would remain lower at around 2 per cent, supported by a credible peg to the US dollar, domestic subsidies, and continued supply of expatriate labour and economic growth, according to the IMF.

The overall fiscal deficit is also expected to narrow in the medium term, driven by spending efficiency measures, it said.