The U.S. Dollar is trading in weak ranges, approaching some of its weakest levels overall since Spring 2022
Overview
Indeed, the rally against the Buck is such that the Bloomberg Dollar Spot Index is about to hit its lowest value since the start of April 2022 ahead of an eventful week with plenty of chances to clarify or further confuse the market narrative. The G-7 nations will be gathering in Canada with global leaders having to focus on a resolution to the Iran-Israel conflict. Over the weekend, the feud only exacerbated further with plenty of bombings back-and-forth affecting beyond just military infrastructures.
Markets are in a bit of shock but not floundering necessarily. The news of Israel attacks Friday prevented the S&P 500 index from entering record highs while oil as well as oil prices halted their resurgence. Markets, for now, interpret the armed interventions as only between Israel and Iran without the involvement of any other party and see relief that the crucial Strait of Hormuz, where a fifth of the world’s oil shipments are handled, did not suffer any damage nor blocks.
There will be plenty of data points to digest tomorrow, gauging primarily Retail Sales for May along with Industrial Production. On Wednesday, we will hear from the Fed as the FOMC meeting and decision are announced. The press conference will be filled with inquiries to see if the Fed is indeed willing to cut interest rates for what is left of the year. Housing numbers and Jobless Claims will also be featured midweek.
What to Watch This Week…
- Euro-zone CPI, Friday
- US Nonfarm Payrolls, Friday 8:30AM
- Monex USA Online is always open
The complete Economic Calendar can be found here.
EUR ⇑
The Euro is trending higher and is currently trading at its strongest value over the Buck since around Halloween of 2021. Doubts over the Dollar’s role as safe-haven and uncertainty over tariffs have clearly given Euro a chance at gains, but lately the value has gone up with outlooks for the Euro-zone starting to look rosier and realistic.
Although the European Central Bank has been reducing interest rates, the shared currency has gained popularity as member nations try to be more of a united front to hold each other accountable in committing to defending the EU, have each other’s economic backs, and are forming plans to be more independent energy and defense-preparedness wise from America as well as China. We shall see how this is reflected in language and tone at the G-7 meeting. There will be a survey of expectations out tomorrow while key inflation data in the form of Consumer Price Index is scheduled for Wednesday.
JPY ⇑
The Japanese Yen could be in line for a major loss in value or big upward swing depending on the tone used tomorrow by the Bank of Japan. As monetary policymakers meet, all eyes and ears will be on Governor Kazuo Ueda and his thoughts on weather the Japanese economy can handle higher borrowing costs down the line since it has experienced contractions in the first half of the year.. We have seen Yen jump in value when it has been speculated that the BOJ would bump up their interest rates, but the global picture has evolved so much in 2025 they decided to be very data-driven and cautious. Inflationary pressures may result in the BOJ looking to hike, but we will not have guidance until tomorrow.
