The global central bank governor group talks + non-farm data is coming, may the fate of the US dollar usher in a turning point?

On the Asian session on Monday, the U.S. dollar index hovers around 97.26, and the U.S. dollar recovered its earlier decline against the euro last Friday after U.S. President Trump said the U.S. would end trade talks with Canada and would consider bombing Iran again, which hit risk appetite and caused stocks to fall. Investors need to keep an eye on key economic data and events this week, including a speech by Fed Bostic on Monday, ISM manufacturing data and global central bank governors’ panel talks, Wednesday’s ADP jobs report and Thursday’s non-farm jobs data.

In addition, many Fed officials and ECB officials spoke this week, focusing on the group talks held by major global central bank governors (Feder Chairman Powell, ECB President Lagarde, BOE Governor Bailey, Bank of Japan Governor Kazuo Ueda, and Bank of Korea Governor Lee Changyong) on ​​Tuesday; at the same time, the ECB held a central bank forum in Sintra, and the ECB released minutes of the meeting.

Analysis of major currencies

Dollar: As of press time, the U.S. dollar index hovered around 97.26, the U.S. dollar fell more than 2% last week, with the lowest as low as 96.99. There was the last trading day left in the first half of the year. The U.S. dollar fell for five months in a row, which will mark its worst first-half trend since 1986; the U.S. dollar recovered its earlier decline against the euro on Friday after U.S. President Trump said the U.S. would end trade negotiations with Canada and would consider bombing Iran again, which hit risk appetite and caused the stock market to fall. Technically, the downtrend line since the February high continues to limit the upside attempt, strengthening the bearish structure. Relative Strength Index (RSI) hovers around 31.39, close to oversold areas, but has not been shown yetThere are signs of reversal.

Euro: As of press time, the euro/dollar hovered around 1.1720, and the euro/dollar fell from the year-on-year high of 1.1750 to fall below 1.1700, although market participants were convinced that the Fed would cut interest rates at its September meeting. The U.S. (US) mixed inflation reports and optimism from U.S. consumers put downward pressure on the pair. The ECB cut interest rates this month, the eighth rate cut in the past year, and said it would at least pause next month as it waited for the fog surrounding U.S. trade tensions to clear. Eurozone inflation fell to 1.9% last month, and the ECB expects inflation to fall below its 2% target next year. Technically, the uptrend remains intact after a series of higher highs and lower lows, indicating that the buyer is still under control. Although the Relative Strength Index (RSI) has reached an overbought state, opening the door for a pullback, the EUR/USD may experience a decline, providing opportunities for buying and pushing the exchange rate toward 1.1800. Breakthroughs will expose 1.1900 and 1.2000. Conversely, if the EUR/USD falls below 1.1700, the first support level will be the day-low of 1.1653 on June 26. Once broken, the next support level will be 1.1600, followed by the 50-day simple moving average (SMA) at 1.1515.

GBP: As of press time, GBP/USD hovered around 1.3710. The GBP softened by 0.19% last Friday to US$1.3701, achieving a weekly increase of 1.85%, the best week since May 19. RBC Wealth Management said in its mid-2025 outlook that the Bank of England may cut interest rates by 75 basis points by the end of 2025 as inflation may further decline. The agency said the UK labour market data appears to be weakening, which increases the likelihood of the Bank of England's further rate cuts. However, there is also the risk of stubborn inflation and accelerated wage growth that may delay interest rate cuts. Data from the London Stock Exchange Group shows that the market currently reflects the expectation that the Bank of England will cut interest rates by a total of 51 basis points by the end of 2025.

Summary of news from the foreign exchange market

1. Trump's "Big and American" bill is only one step away from the Senate clearance. The Democrats have to bear the "drag" tactics

On June 28, local time, the U.S. Senate passed a procedural motion with a vote of 51 to 49, aiming to promote the large-scale tax and expenditure bill called "Big and American" by US President Trump. U.S. Senate agendaAfter the sequential vote is passed, the possibility of the bill passing in the next few days increases. It is reported that after the procedural motion is passed, the large-scale tax and expenditure bill will undergo reading, debate, amendment votes and final votes, which is expected to take several days. There is less than a week left before Trump's "deadline" on July 4. Not only did all members of the Democratic Party vote against it, but also adopted the word "drag". U.S. Senate Minority Leader Schumer said on the 28th that the Democrats will force the reading of the 940-page bill in the Senate. The Capitol Hill reported that reading the bill would take 12 hours.

2. The United States and G7 members will establish a "parallel" system to avoid a global tax war

The United States and other G7 members have signed an agreement aimed at avoiding a global tax war, proposing to establish a "parallel" system to protect U.S. www.avaforexcn.companies from certain provisions of the existing global agreement. As part of the agreement, U.S. officials agreed to remove the provisions in the Trump tax cut bill that would increase the taxes required to earn by non-U.S. www.avaforexcn.companies and individuals in the U.S. This Section 899 is also known as “retaliatory tax” because it only raises the tax rates for countries that are considered discriminatory tax policies by the U.S. government. The G7 said in a statement on Saturday that this parallel system could "provide greater stability and certainty for the future international tax system."

3. Non-agricultural prospect: Non-agricultural reports are expected to occupy the headlines. Immigration issues may make the data difficult to predict.

This week will be shortened due to the Independence Day holiday in the United States, but non-agricultural employment data will remain the focus of discussion. Vacancy data will be released on Tuesday, with the latest data showing a significant increase in the number of vacancies, but labor mobility (resignation and resignation) remains at extremely low levels.

The non-farm employment report for June will be released on Friday. Given the large fluctuations in the number of immigrants over the past few years, it is difficult to determine exactly how much employment growth is consistent with stable labor markets and population growth, but the three-month moving average is 135,000, and June data is likely to be within this range or at the upper limit of the range. A small increase in unemployment (from a low of 4.2% to a high of 4.2%) and the increase in employment vacancy continue to indicate that despite the slower hiring rate, there is no immediate, serious concern in the current job market. For June, employment growth is expected to reach 116,000 people and the unemployment rate will rise to 4.3%.

4. Japan and the United States launched the seventh round of ministerial tariff negotiations

According to Kyodo News, Japan's economic regeneration minister Ryo Akasawa was meeting with www.avaforexcn.commerce Secretary Lutnik in Washington, US on the 27th local time. Japan and the United States launched the seventh round of ministerial negotiations around the Trump administration's high tariff policy. The Japanese government said: "A fruitful discussion was held. We will continue to coordinate fully between Japan and the United States toAgree to reach an agreement that is beneficial to both parties. "Ryosa Akasawa did not immediately accept the media interview after the negotiations. The talks between the two lasted about an hour. Considering that the partial suspension period of the additional tariffs was until July 9 and Japan will implement the voting of the Senate election on the 20th, for cars that the Japanese government regards as "national interests", Ryosa Akasawa demanded a significant reduction in the tariff rate.

5. Japanese polls show that Shiro Ishiro Ishiro Ishiro Ishiro Cabinet Support Rate is less than 30% for four consecutive months

Recently, a latest Japanese poll showed that the cabinet support rate led by Japanese Prime Minister Shiro Ishiro Ishiro was 24%, Less than 30% for four consecutive months. In Japanese politics, a cabinet support rate below 30% will be regarded as entering a "dangerous water" by public opinion; if it falls further below 20%, it will be regarded as falling into a "resignation water". According to Japanese media, if the current ruling coalition cannot obtain more than half of the seats in the Senate election held on July 20, Shigeru Ishiba may lose his position as prime minister.

Institutional View

1. UBS: It is expected that the US trade and fiscal decisions in July will not have a lasting impact

Kinshi data reported on June 28, The U.S. will make important decisions about trade and fiscal policy in July. While these decisions may cause volatility, we do not expect to have a lasting impact on strong U.S. growth or markets. The environment of falling interest rates and yields supports stocks and high-quality bonds, while the U.S. dollar will continue to show signs of weakness. After a recent strong gain, global stock market returns for the rest of the year appear to be limited.

2. TD: The next risk to the U.S. dollar www.avaforexcn.comes from Canadian pension funds stepping up hedging. TD Securities believes that the U.S. dollar will fall further, Because, as one of the largest holders of U.S. stocks, Canadian investors are under pressure to increase the hedging ratio of dollar assets. “Since the beginning of this year, the dollar’s ​​safe-haven attractiveness has declined, causing the demand for these funds to hedge long exposures to their U.S. assets,” TD Securities team Jayati Bharadwaj, Mark McCormick and Linda Cheng wrote in a Friday report. A further decline in the dollar “will further prompt Canadian investors to adjust their hedging policies, which could put further downward pressure on the pair. "In the first half of 2025, the Canadian dollar has risen more than 5% against the dollar, the best start in nearly a decade. TD strategists predict the Canadian dollar will rise further in the future. They expect the Canadian dollar to rise to 1.31 against the dollar by December, which will be the strongest level since 2022, about 4% higher than the current level of about 1.3665. The TD team estimates that Canadian pension funds — some of which have clear policies that are not sufficient to hedge against U.S. assets — have hedging ratios of about 10% to 15%. Overall, Canadian investors hold about $1.8 trillion in U.S. stocks. Analysts write that the marginal increase of 5% of the hedge ratio could lead to a U.S. dollar-to-Canadian side.There is pressure to sell out about $90 billion.

3. Royal Bank of Canada: Canada's economy is weak, but it is not expected to fall into recession

RBC's ClaireFan said Canada's GDP contracted by 0.1% month-on-month in April, and preliminary estimates will also see a similar contraction in May, indicating that GDP will remain relatively flat in the second quarter, while growth in the first three months was boosted by increased inventory before tariffs. Fan predicts that the impact of trade uncertainty is still relatively controllable, and the economy will weaken by the end of the year, but will not deteriorate significantly. A broader trade headwind will slow down U.S. demand for imported goods, including for Canadian goods, but domestic demand in Canada may remain unchanged overall and the economy will not fall into recession.

   

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