The Week Ahead

Economic

Summary:

U.S. stocks rally despite economic risks, driven by trade deal optimism and strong breadth. Q2 earnings loom, dollar weakens, and key data this week may shift Fed rate cut expectations to July.

By Kathleen Brooks, research director at XTB

US stocks powered to record highs last week, on the back of a stunning rally since mid-April, which has added more than $10 trillion to the market cap of the S&P 500. The rally was unexpected for some, due to policy uncertainties, and elevated recession risks. The labour market is softening and inflation ticked higher in May. So, what is driving stocks higher and can it last?

Stocks have defied these fears, and although there are warnings about bubbles forming, futures markets predict another positive open for US and European stocks on Monday, due to progress with trade negotiations. Canada has dropped its 3% levy on the biggest US tech firms like Netflix, Amazon and Meta, to restart negotiations with its biggest trading partner. Added to this, Japan’s top trade negotiator has extended his stay in the US to advance discussions in the hope of signing a deal within days. The hope of rapid trade deals between the US and its main trading partners is acting as a positive tailwind to the market. Thus, momentum could be a big driver of markets in the coming days and weeks.

Earnings expectations

As we move into Q3, the focus will shift to the Q2 earnings season. Earnings estimates for the S&P 500 for Q2 is for growth of 5% YoY, which is the lowest since Q4 2023, according to FactSet. There have been large downward revisions to earnings estimates for this quarter, as analysts factored in global trade tensions and economic risks. Added to this, 11% of companies on the S&P 500 have issued negative EPS guidance for Q2.

Q2 earnings season will start in the next couple of weeks, and we will see if the bar has been lowered enough for companies to post positive earnings surprises, which will no doubt keep stock markets buoyant. Further out, analysts are more optimistic. Estimates are for S&P 500 companies to see a pickup in earnings in Q3.

Stock market rally: not just about tech

A temporary blip in earnings in Q2, if it happens, has not been enough to curtail the stock market rally. A feature of the recent stock market rally in the US is how broad-based it has been. The S&P 500, the equal-weighted S&P 500, the Russell 2000 and Nvidia have been moving in lockstep. The S&P 500 has risen by 10% in Q2, the Nasdaq by 17%, the Russell 2000 by 8% and the Russell 3000 by 10%. This suggests that the US stock market rally in 2025, although it was slow to get going, is broader based than the tech-fueled frenzy from 2024.

Dollar woes continue

Hopes that Trump’s tax cuts could be signed into law later this week are also fueling the rally, as the Budget Bill passed the Senate on Saturday. Interestingly, the Budget, which could add another $3.3 trillion to the US deficit over the next ten years, is not worrying the stock market, although it is weighing on the dollar. The dollar index has had its worst start to the year since 2005. The dollar is weaker again on Monday, and is the worst performing currency in the G10, as we wait to see if Trump can sign his Budget into law by the Independence Day holiday.

Technical signals for encouraging for the US stock market

The market breadth is also encouraging. 384 members of the S&P 500 rose last week, compared with 119 companies that declined, and only a small number of stocks are looking oversold on a technical basis. 50% of the S&P 500 are above their 200-day sma, which is a healthy number and suggests that there is room for other stocks to play catch up.

Crypto’s big influence on the S&P 500 rally

Although Nvidia is grabbing the limelight for rallying 15% in the past month, and is nearing a $4 trillion valuation, other stocks have outperformed Nvidia, and it is not even in the top 10 performers on the S&P 500 so far this quarter. The top performer is Coinbase, the crypto platform, which is benefitting from the surge higher in crypto currencies, including Bitcoin, which is a mere $3000 away from a record high. Coinbase is higher by 105% for Q2. The construction and engineering sector has also outperformed the semiconductor sector so far in Q2, and the entertainment and movies sector is also a top ten performer.

European stocks: why investors are cooling on defense names

There is also a shift going on in Europe. US stock indices outperformed their European peers in Q2, although on a currency adjusted basis, the surge in the euro and the pound vs. the USD boosted the currency adjusted returns on European indices. Over the last month, the outperformance of US indices compared to European indices has become more notable. European shares have been weighed down by a slowdown in the defense sector. Nvidia has outperformed Rheinmetall in the last few months, which has fallen 7%, while Nvidia has risen 15%. This leads to questions about whether the high valuations placed on some European defense stocks will weigh on the sector, and on European stocks more broadly as we move into Q3.

UK stocks back in focus

In the UK, Rolls Royce is still riding high, and is up 12% in the past month. This is because RR is more diversified than other European defense stocks. UK stocks could be having a moment, due to a multi-year valuation gap that is finally starting to interest investors, and because the UK has already sealed a trade deal with the US. Bloomberg’s ETF flow data shows a clear preference for UK equities within flows to Europe. In June, there was a net reduction in ETF flows to French ETFs, inflows into German ETFs have slowed sharply, while inflows into UK ETFs have reached their highest level so far in 2025. If this continues, then we could see UK equities outperform their European counterparts over the coning weeks, especially if the EU and the US experience trade tensions as we lead up to the deadline to agree reciprocal tariffs with the US.

Tarriff risks come back into focus

Overall, the focus is likely to shift as we move into July. Falling volumes will become apparent in the coming week, as US markets are closed on Friday for the 4th July holiday. Tariffs will come back into play. The US and China have made a trade deal, but the EU and the US have still not announced what a deal will look like. Trade talks with Canada are set to resume, after Canada pulled its digital sales tax that was due to come into effect today.

What next for the beleaguered dollar?

The dollar will also be in focus after it suffered more losses last week, even though it managed to claw back gains vs. some G10 currencies on Friday. The dollar index fell to its lowest level since 2022 last week, and momentum is firmly to the downside for the greenback. It is the weakest currency so far in 2025 vs. all the major currencies, and it is also weak vs. a large number of emerging market currencies. It is only making gains vs, the Argentine peso, the Turkish lira and is mostly flat vs the Hong Kong dollar.

The main story over the weekend, that the US Senate passed a vote to advance President Trump’s tax and spending mega bill, may not boost the dollar and could add as another downside pressure in the coming days.

Will the US Budget Bill spook the Treasury market and global bonds?

The Senate Budget bill could increase US government deficits by $3.3 trillion. Thus, it is worth watching US Treasuries and global bond markets at the start of this week. Treasuries fell and yields rose across the curve on Friday. The rise in yields in the US was copied across Europe, suggesting that Western sovereign bonds are moving in a unified group, and there are few safe havens. In the past month there has been a large increase in Treasury prices/ decrease in yields, some of this may be unwound as the realities of the US budget and what it means for the US deficit in the coming years hits the bond market.

Data watch: NFPs, PMIs and Eurozone inflation

Ahead this week, the focus will not only be on the passage of the US Budget Bill and ongoing US trade negotiations, but also on some key economic data. Central banks are set to ease monetary policy in the coming months; however, they have said that they remain resolutely data dependent. This week’s key economic releases, including global PMIs for June, US non-farm payrolls and the latest reading of Eurozone inflation will be critical for central bank policy makers.

US non-farm payrolls will be released a day earlier this month due to the Independence Day holiday on Friday. The Fed remains firmly in data-watch mode, and they have raised concerns about inflation feeding through from the effect of tariffs. However, there are some early signs that the US labour market may be softening. Initial jobless claims are slowly ticking higher, and a weak NFP number this week could tip the balance in favour of an early rate cut from the Fed. The market is still expecting a September rate cut, but there are some FOMC members who have been calling for a July cut. A collapse in job creation, could seal the deal on a summer rate cut.

A slowing jobs market could bring forward hopes of a summer rate cut

The market expects 110k jobs to have been created for June, which will be the lowest level since February. NFP figures are prone to revisions, so investors need to be wary about over-reacting to this data, since it may be revised in the future. However, a reading of 110k or below would be a sign that the US labour market is slowing sharply. Combined with last week’s downwardly revised Q1 GDP figure, it would suggest that the US economy is slowing sharply. Wage data is also worth watching, it is expected to show a solid 3.9% annual growth rate in average hourly wages, and the unemployment rate is expected to tick higher to 4.3% from 4.2%.

The biggest market reaction would come from a higher-than-expected reading for the unemployment rate, and a weak reading for NFPs. If this happens then we could see another leg lower for the dollar, but stocks may get a boost as this could lead to a surge in wagers that the Fed will cut rates in July, rather than wait for September to cut rates.

PMIs and Eurozone inflation may not derail the euro rally

The PMI data this week is expected to show that growth in Europe and the UK is showing tentative signs of picking up, however, survey data could be unreliable. If trade deals are not signed between the US and the Eurozone in the coming days then PMI data for July could fall through the floor.

Eurozone inflation data is also released this week. Core CPI is expected to remain steady at 2.3%, while headline CPI is expected to edge up a notch to 2% from 1.9%. The June inflation print is not expected to shift the dial for ECB rate cuts, and we do not think that this week’s data will get in the way of euro strength.

Source: xtb

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

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Adam

Commodity

WTI/CL Technical Analysis

The light sweet crude oil market is just simply hanging around to reach the $65 level, which is an area that previously had been significantly resistant. We fell precipitously to this level only to sit still. That, for me, is actually a very bullish turn of events as it looks like the market is done with a lot of the Middle Eastern noise and now, we’ll start to focus on demand and more fundamental, typical reasons.

All things being equal, this is a market that I think is looking for some type of catalyst, but there’s also the possibility that the traders are just simply exhausted at this point. If we can break above the $66.50 level, then I think light, sweet, crude opens up the possibility of a move to the $72.50 level. If we break down from here, then I think we just re-enter the previous consolidation.

Brent Technical Analysis

Brent markets look a bit the same. They’re a little, maybe a little bit softer than the light sweet crude market, but again, we are sitting on top of pretty massive support based on the previous consolidation. So, with this being the case, I think you’ve got a situation where traders will be watching if we can break above the $69 level, then potentially we go higher. With that, I think we’ve got a situation where the 200 day EMA may be targeted.

If we break down from here, I think there’s plenty of support at various levels, not the least of which would be $64, followed by $62. So we’ll have to watch. I think this is a market that is trying to find its floor as well. But we had so much drama over the last couple of weeks, it may need a few days just to simply catch its breath.

Source: fxempire

Risk Warnings and Disclaimers

Add to Favorites

Warren Takunda

Economic

China–U.S. Trade War

The European Union's trade chief will hold negotiations this week in Washington to avert higher U.S. tariffs just days before a July 9 deadline, saying he wanted a fair deal as the EU executive dismissed any forced changes to EU tech rules.

European Trade Commissioner Maros Sefcovic told reporters he would travel to Washington after talks in Turkey on Tuesday and seek meetings with U.S. Trade Representative Jamieson Greer and Commerce Secretary Howard Lutnick on Wednesday and Thursday.

Sefcovic said the EU had received the first drafts of proposals from the United States for an eventual agreement.

"The ninth of July is round the corner so for me, it's always a good sign when we move from the exchange of views into the drafting process," he said.

Sefcovic said the EU was pushing for a deal on import levies that was "fair for both sides" and gave more predictability to businesses.

Earlier, the European Commission, the EU's executive, pushed back against speculation that the 27-member EU's landmark tech regulatory regime could be included in the EU-U.S. negotiations and subsequently watered down.

EU concerns mounted after U.S. President Donald Trump broke off trade talks with Canada in response to Canada's digital services tax, accusing Ottawa of "copying the European Union". Canada subsequently rescinded the tax.

The EU has two pieces of recent legislation targeted by the Trump administration.

The Digital Markets Act (DMA) seeks to rein in the power of U.S. tech giants Alphabet , Amazon, Apple, Meta Platforms and Microsoft, as well as Booking.com and China's ByteDance.

The Digital Services Act (DSA) requires big online platforms to do more to tackle illegal and harmful content.

"Our legislation will not be changed. The DMA and the DSA are not on the table in the trade negotiations with the U.S.," Commission spokesperson Thomas Regnier told a daily news conference.

He said the EU would not accept interference from foreign governments in its landmark rules, which come with hefty fines for violations.

"We are not going to adjust the implementation of our legislation based on the actions of third countries. If we started to do that, then we would have to do it with numerous third countries," Regnier said.

The EU handed out its first fines to Apple and Meta earlier this year and both risk further daily fines if regulators find that they have yet to comply with the rules in the coming months.

Source: Reuters

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

Risk Warnings and Disclaimers

Add to Favorites

Thomas

Economic

It’s a widely held belief among economists that President Donald Trump’s tariffs will boost inflation notably over the next few months. But muted price increases so far have called that assumption into question, emboldening the White House and opening up divisions at the Federal Reserve.

Anticipation of firmer inflation has kept the US central bank from delivering interest-rate cuts this year as it waits to see what happens. The Trump administration is applying intense pressure on Fed Chair Jerome Powell to bring down borrowing costs, and two Fed governors in recent days have publicly diverged from Powell by asserting a cut could be appropriate as soon as July.

A pair of key reports in the coming weeks — the monthly jobs report due Thursday and another on consumer prices due July 15 — will be critical in determining the central bank’s next steps. Both are expected to finally begin reflecting the impact of tariffs, but any surprises could change the schedule for rate cuts.

“One of the things that makes it such a difficult situation is that we simply haven’t done this sort of experiment in the past,” William English, a professor at the Yale School of Management and former high-ranking Fed economist, said of the tariffs. “We’re outside the range of experience for a modern US economy, and so it’s very difficult to be confident about any forecast.”

Trump and his allies have escalated attacks on the Fed and Powell in recent weeks, motivated by data showing inflation remained tame through May despite the tariffs put in place. The president has lobbed several insults at Powell, calling him a “numbskull” and “truly one of the dumbest, and most destructive, people in Government.”

Other Trump administration officials and some congressional Republicans — oftentimes more reticent to weigh in on monetary policy — have joined in as well. Kevin Hassett, director of the White House National Economic Council, said on June 23 that there is “no reason at all for the Fed not to cut rates right now.”

Hassett, who is seen as a possible replacement for Powell when the Fed chair’s term expires next year, emphasized data due in the coming weeks: “I would guess that if they see one more month of data, they’re going to really have to concede that they’ve got the rate way too high,” he said.

Source: Yahoo Finance

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

Risk Warnings and Disclaimers

Add to Favorites

Warren Takunda

Cryptocurrency

Key points:

Bitcoin approaches the monthly and quarterly close with a sea of order-book liquidity piling up.

Shorts looked primed to be taken out, analysis argues, with a long-term resistance trend line in focus.

Fed Chair Jerome Powell is due for replacement, leading to hyper-bullish bets on risk assets.

Bitcoin dipped toward $107,000 after the June 30 Wall Street open as analysis eyed a major new “short squeeze.” Bitcoin Teases 'Brutal' Short Squeeze as Sellers Protect $108K_1

Bitcoin Teases 'Brutal' Short Squeeze as Sellers Protect $108K_1

BTC/USD 1-hour chart. Source: Cointelegraph/TradingView

BTC price surfs liquidity into crunch candle closes

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD reversing gains made into the weekly close, down 1.1% on the day at the time of writing.

With hours to go until the monthly and quarterly closes, traders expected volatility, while exchange order-book liquidity grew.

“With BTC spot edging toward $108k, we’re beginning to see a build-up in leveraged longs as perpetual funding rates flip from flat to positive across major exchanges,” trading firm QCP Capital noted in its latest bulletin to Telegram channel subscribers.

“Positioning appears to be chasing the move, as participants lean into directional bets ahead of quarter-end.” Bitcoin Teases 'Brutal' Short Squeeze as Sellers Protect $108K_2

Bitcoin Teases 'Brutal' Short Squeeze as Sellers Protect $108K_2

Bitcoin exchange order-book liquidity. Source: TheKingfisher/X

Discussing likely BTC price reactions, popular X trading account TheKingisher favored shorts feeling the heat — something which would ensue with only minor upside.

“Below us, a cluster of long liqs around 106k-107k. But above? A HUGE wall of short liquidations immediately above current price, peaking fiercely around 108k-108.5k!” part of a post summarized alongside cross-exchange liquidity data.

“That's a strong magnet. Short squeezes can be brutal if price pushes through 107.5k.”

Continuing, popular trader and analyst Rekt Capital had mixed news for bulls. BTC/USD, now faced an important final resistance battle to open the door to price discovery.

“After having launched from this local green area of support... Price is now pulling back into this region for another retest,” he added about the daily chart.

“Continued stability here would enable another challenge of the Main Downtrend dating back to late May (black).”

BTC/USD 1-day chart. Source: Rekt Capital/X

Fed’s Powell replacement may trigger “one of the biggest runs” for stocks

Ahead of a quiet four-day TradFi week in the US, bullish crypto cues nonetheless came thick and fast on the day.

A recommendation of a 40% crypto allocation by Ric Edelman, founder of $300 billion fund Edelman Financial Services, combined with news that Washington was set to seek a replacement for Jerome Powell, Chair of the Federal Reserve.

As Cointelegraph reported, Powell continues to field public criticism from US President Donald Trump over his refusal to lower interest rates, with the latter demanding that these fall from the current 4.25% to just 1%.

“If the new Fed Chair actually cuts rates to 1%, we are going to witness perhaps one of the biggest runs of all time in stocks and real estate,” trading resource The Kobeissi Letter predicted on the day.

“There has never been a time in history where the Fed cut rates to 1% with the stock market and home prices at all time highs.”

Source: Cointelegraph

Risk Warnings and Disclaimers

Add to Favorites

Adam

Stocks

Clean energy stocks fell on Monday as President Donald Trump’s spending legislation now includes a tax on wind and solar projects using Chinese components and abruptly phases out key credits.

Shares of NextEra Energy , the largest renewable developer in the U.S., fell 4%. Solar stocks Array Technologies, Enphase and Nextracker were down between 4% and 9%.

The Senate is voting Monday on amendments to the legislation. The current draft ends the two most important tax credits for solar and wind projects placed in service after 2027.

“The latest Senate draft bill will destroy millions of jobs in America and cause immense strategic harm to our country,” Tesla CEO Elon Musk posted on X over the weekend. “Utterly insane and destructive. It gives handouts to industries of the past while severely damaging industries of the future.”

Previous versions of the bill were more flexible, allowing projects that began construction before 2027 to qualify for the investment and electricity production tax credits, according to Monday note from Goldman Sachs.

Compressed timelines

The change “compresses project timelines and adds significant execution risk,” Bank of America analyst Dimple Gosal told clients in a note Monday. “Developers with large ’25 pipelines, may struggle to meet the new deadlines — potentially delaying or downsizing planned investments.”

The Senate legislation also slaps a tax on solar and wind projects that enter service after 2027 if they use components made in China.

“The latest draft in the Senate has become more restrictive for most renewable players, moving toward a worst case outcome for solar and wind, with a few improvements for subsectors on the margin,” Morgan Stanley analyst Andrew Percoco told clients in a Sunday note.

To be sure, the rooftop solar industry is viewed by Wall Street as a relative winner from the bill, with Sunrun shares up more than 7% and SolarEdge trading more than 3% higher on Monday. The legislation seems to allow tax credits for leased rooftop systems to remain in place through the end of 2027, which was not the case in previous versions, according to Goldman Sachs.

And First Solar is up more than 7% as the legislation seems to allow the manufacturer to claim credits for both components and final products, according to Bank of America.

source :cnbc

Risk Warnings and Disclaimers

Add to Favorites

Adam

Economic

Confidence in the US dollar remains low in global markets. The dollar index (DXY), hovering around 97, is very close to its lowest level in the past three years. Domestic political uncertainties and signals of possible monetary policy intervention have played a key role in this decline. In particular, President Donald Trump’s increasing pressure on the Fed, and his open desire to replace Jerome Powell with a more dovish chair, have raised concerns in the markets about the Fed’s independence.

Political Pressure on the Fed: Monetary Policy Independence Back on the Agenda

Trump’s remarks on Fox News regarding interest rates—stating that the Fed should cut its policy rate to 1–2%—and his explicit wish to replace Powell have increased speculation about a "politically motivated monetary policy." Reports last week that Trump may soon announce Powell’s successor have added to fears that he could speed up the process. This has brought the Fed’s independence back into question and is seen as a factor contributing to the medium-term structural weakening of the dollar.

Market pricing for the Fed’s next moves is also being shaped by this backdrop. Fed Chair Powell’s remarks in Congress, suggesting a rate cut was on the table if inflation does not rise significantly during the summer, were interpreted by markets as a clear dovish signal. According to market expectations, the probability of a 25 basis point rate cut in September has risen to 91.5%. While some analysts believe the market is pricing in too much, the underlying pressures on the dollar remain intact.

Trump’s Giant Budget Deficit Plan Also Challenges the Dollar

Another major factor undermining the dollar’s strength is concern over the Trump administration’s economic policies. The Congressional Budget Office (CBO) estimates that Trump’s $4.2 trillion tax cut and spending package—recently passed by the Senate—could widen the budget deficit by $3.3 trillion between 2025 and 2034. This could strain the U.S. debt outlook and weigh on the dollar’s long-term status as a reserve currency.

Trump’s aggressive rhetoric toward Iran and renewed trade tensions with Canada over the digital services tax are also dampening global risk appetite and reducing demand for the dollar. Although Canada has since reversed the tax and resumed talks with the U.S. and China, the threat of new tariffs after July 9 is reintroducing market anxiety.

On the macroeconomic side, May core PCE data in the U.S. came in above expectations at 2.7% year-over-year. This triggered a rise in bond yields but still indicated that inflation expectations remain anchored. The decline in University of Michigan inflation expectations supports this view.

However, the key data point this week will be the nonfarm payrolls report. If a labor market slowdown materializes as expected, the Fed may move more quickly toward a rate cut. If not, the optimism surrounding dovish expectations could fade. As such, data flow may lead to increased volatility this week.

DXY Technical Outlook: Monitoring Critical Support Zone

The dollar index has recently fallen as low as 97, breaking below the support level at the Fib 1.272 extension—around 97.65—amid recent declines. This marks a move into the Fibonacci expansion zone from a technical standpoint.

US Dollar: Will Trump’s Budget Deficit Plan Accelerate Greenback’s Downtrend?_1

The next support level in the DXY, which continues to move within a descending channel, stands at 96.25. If the intermediate support at the 97 level fails during the week’s volatility, we may see the index drop toward the 96 region. Conversely, if the 97 level holds, then 97.65 becomes the next immediate resistance. A break above that could trigger a move toward 98. Such a move would also represent an upward breakout from the descending channel. Should the DXY remain above 98 during the week on any rebound, this could establish a neutral outlook in the 98–100 band going forward. However, current developments suggest continued weakness in the dollar is more likely for now.

Trump’s strong criticism of the Fed, aggressive fiscal policies that widen the budget deficit, and lingering trade uncertainties continue to weigh on the dollar in both structural and short-term contexts. Expectations for a rate cut by September remain high and will likely support further downward pressure on the DXY. In the coming period, employment data, inflation readings, and Trump’s statements following July 9 will remain key drivers of the dollar index. In conclusion, while the DXY remains under pressure in the short term, Fed policy and macroeconomic data will play a decisive role in determining its medium-term direction.