Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Euro, yen dominate as USD eases further
The US dollar continued to slide overnight, with the USD index hitting its lowest level since July 2022. The Australian and New Zealand dollars both reached new eight-month highs.
The US dollar fell despite better manufacturing and job numbers with markets instead mostly focused on the potential for further US rate cuts later in the year.
With the deadline for the next round of tariff announcements due – US President Donald Trump is due to confirm the end of the 90-day suspension of tariffs on 9 July – FX markets have favored “safe haven” currencies.
The euro, Japanese yen, and Swiss franc were the biggest gainers. EUR/USD climbed to a four-year high, while USD/CHF dropped to its lowest level since 2015.
Although AUD/USD and NZD/USD hit new highs earlier in the session, both pairs ended flat, suggesting the rally may be losing momentum.
Fed would cut, if not for tariffs
It’s summer in the Northen Hemisphere, so that means it’s time for central bankers to spend time at one of their two major annual conferences – Sintra in Portugal in July and Jackson Hole in Wyoming in August.
This week’s meeting in Portugal showed broad agreement among central bankers that inflation is returning to target levels.
European Central Bank president Christine Lagarde confirmed the view that the central bank has achieved its target adding strength to the view that the ECB is probably finished with rate cuts and helping support the EUR.
On the other hand, Federal Reserve chair Jerome Powell said inflation is at a “favorable” level but said the Fed was forced to go hold when the size of the US tariffs became apparent.
Powell said he expects higher inflation readings over the next few months: “We’re simply taking some time. As long as the US economy is in solid shape, we think that the prudent thing to do is to wait and learn more and see what those effects might be.”
JOLTS data in focus ahead of non-farm payrolls
The US dollar recovered slightly from its lows overnight after a stronger-than-expected reading from the Job Openings and Labor Turnover Survey (JOLTS).
The May JOLTS number climbed from 7.40m to 7.77m versus expectations for a fall. The result is seen as a positive ahead of Thursday night’s all-important US jobs report.
A strong non-farm payrolls number could help the US dollar rebound after its weakest start to a year since 1973.
Aussie, kiwi pause at highs
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 30 June – 4 July
All times AEST
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
