Market Overview
- The US Dollar experienced its worst first-semester performance in nearly forty years due to unstable trade policies and declining foreign demand.
- The Euro and the Japanese Yen are benefiting from capital flows shifting away from the Dollar.
- Gold prices are approaching $3,300, with gains limited by US equity strength.
- The Indian Rupee weakens against the US Dollar due to equity losses and higher oil prices.
- The Japanese Yen is performing well against the US Dollar and other G10 currencies due to narrowing interest rate differentials.
Fundamental Analysis
- In June, Germany's annual inflation decreased to 2% from 2.1% in May, but this had little impact on the EUR/USD which remained stable at 1.1715.
- The Federal Reserve may implement rate cuts, potentially leading to further Dollar depreciation.
- The Reserve Bank of India's Financial Stability Report highlights robust economic growth but warns of external risks.
- Despite weak industrial production data in Japan, the focus is on the upcoming Tankan sentiment survey figures and a speech by BoJ Gov. Ueda.
Technical Analysis
- EUR/USD is consolidating near multi-year highs at 1.1750 despite disappointing German Retail Sales data.
- GBP/USD is trading below last week's multi-year highs with a bullish technical outlook.
- USD/JPY is bearish, with potential for a push towards the recent range low of around 142.50.
- Gold prices face downside risks below $3,300.
Conclusion
- Without significant policy changes, the Dollar could continue to weaken, signaling a potential shift in its global dominance.
- The Euro remains strong against the US Dollar due to hopes of trade normalization.
- Gold may benefit from deficit-driven tax policies and inflation fears.
- The Pound Sterling (GBP) is slightly down against the US Dollar (USD) as it trades below last week's multi-year highs.
- The US Dollar remains weak against most currencies, with optimism about trade agreements favoring risk-sensitive currencies.
- The Japanese Yen is performing well against the US Dollar and other G10 currencies due to narrowing interest rate differentials.
- The Indian Rupee weakens against the US Dollar due to equity losses and higher oil prices.
