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Hello everyone, today Avatrade Avatrade Ava Foreign Exchange will bring you "[Ava Ava Foreign Exchange Decision Analysis]: Trump's major tariff statement! The United States and G7 members reached a trade agreement." Hope it will be helpful to you! The original content is as follows:
On June 30, during the Asian session on Monday, spot gold fell, trading around $3,268.70/ounce, a month-long low. Optimistic trade news boosted risk appetite and weakened the attractiveness of gold as a safe-haven asset; U.S. crude oil fell more than 1%, trading around $64.80/barrel. Tensions in the Middle East were eased and optimistic trade news boosted demand expectations, and OPEC+ plans to increase production in August, dragging down oil prices.
ForexLive chief currency analyst Adam Button said: "In summary, these two news highlights how capricious Trump is, and any assumptions in the market may be destroyed instantly. The market's instinctive reaction is to buy the dollar, but once the dust settles, this trend is likely to pull back. The trade war has been posing a drag on the dollar throughout the year."
U.S. Treasury Secretary Bescent said earlier last Friday that various trade agreements between the Trump administration and other countries may be www.avaforexcn.completed before the Labor Day holiday on September 1.
Trump also sharply criticized Iran's supreme leader Khamenei, abandoning plans to lift sanctions on Iran, and said he would consider bombing Iran again if Tehran's uranium enrichment reaches worrying levels.
Earlier last Friday, the dollar fell to a three-and-a-half low against the euro, as traders bet that the Fed would cut more rates and that it may have been earlier than expected as some U.S. data shows the economy is weakening.
A report last Friday showed that U.S. consumer spending unexpectedly fell in May due to weakening boosting effects of buying goods such as motor vehicles before tariffs were imposed, while monthly inflation increasedThe width is still mild.
The weekly employment report released last Thursday showed that the number of people who continued to apply for unemployment benefits rose to the highest level since November 2021, while the GDP data for the first quarter reflected a sharp decline in consumer spending.
Federal Chairman Powell's testimony in the U.S. Congress last week was interpreted as dovish because he pointed out that if inflation does not rise this summer as he expected, interest rate cuts could be possible.
There are reports that U.S. President Trump may also appoint Powell's successor in the www.avaforexcn.coming months, exacerbating the weakness of the dollar.
The new Fed chairman is expected to be more dovish, and the early appointment may serve as a shadow chair before Powell's term ends in May, thereby weakening Powell's influence. The Fed's interest rate cut will reduce the US dollar's interest rate advantage over other currencies. Traders are expected to cut interest rates by 65 basis points by the end of the year, up from the 46 basis points estimated a week ago.
Asian market
New Zealand's business confidence improved significantly in June, with the overall ANZ index rising from 36.6 to 46.3, and the outlook for corporate own activities climbing from 34.8 to 40.9. Inflation expectations remained stable at 2.71%.
ANZ warned that the underlying environment remains difficult, citing continued cost pressures, meager profit margins and a global context that continues to “stamp risk-taking.” The bank stressed that while the first quarter growth of 0.8% month-on-month growth was solid, the outlook for the second quarter seemed to “look less optimistic.” Despite stronger market sentiment, real business conditions and demand may remain under pressure in the www.avaforexcn.coming months.
ANZ continued to predict the rate cuts of the New Zealand Fed will exceed the central bank’s current forecast, believing that the recovery could be lower than policymakers’ expectations. Nevertheless, it acknowledged that the Fed appears to be inclined to move slowly to balance inflation risks and economic weakness.
Japan’s industrial output in May was well below expectations, up just 0.5% month-on-month, while expecting a 3.4% month-on-month growth. Although output in key industries such as machinery and automobiles improved, But the five categories, led by non-automotive transport equipment, saw a decline.
Shipments grew by 2.2% month-on-month, while inventory fell by -1.9%, providing some positive signals, but not enough to change the ministry's cautious tone.
The Ministry of Economy, Trade and Industry maintained its assessment that output was "indecisive". A survey of manufacturers showed that it was expected to grow by 0.3% month-on-month in June and -0.7% month-on-month in July.
European Market
European www.avaforexcn.commission's June economic data showed that business confidence had further deteriorated, with economic prosperity indicators in the EU and the eurozone falling to 94.0.
France (-3.4) mainly in the EUConfidence declined the most among the member states, followed by Spain (-1.4) and Germany (-0.8), while Poland (+1.0) rebounded slightly.
The deterioration of industry confidence has led to a decline, and the retail industry has also contributed. While the construction industry recovers, people remain firm in their confidence in services and consumers.
However, employment expectations remained stable, with the EU's EEI remaining unchanged (97.5) and the euro zone was slightly higher (97.1).
U.S. market
Canada's GDP shrank by -0.1% month-on-month in April, lower than the expectation of flatness. The weakness was concentrated in the www.avaforexcn.commodity production sector, down -0.6% month-on-month. The service industry provided a moderate offset, up 0.1% month-on-month. Only 10 of the 20 industrial sectors showed growth, indicating widespread weakness.
Looking forward, preliminary data show that real GDP in May fell by -0.1% month-on-month. Mining, oil and gas extraction, public administration and retail trade all put pressure on economic activity, and only real estate and leasing provide meaningful offsets.
The U.S. core PCE inflation rate accelerated to 2.7% year-on-year in May, higher than expected 2.6% and higher than the upward revision in April. The overall PCE index also rose slightly from 2.2% year-on-year to 2.3% as expected. While inflation data highlights ongoing price pressures – especially in core categories – consumption data portrays weaker prospects.
Personal income unexpectedly fell -0.4% month-on-month, a significant decline www.avaforexcn.compared with the expected 0.2% growth. Personal expenditure fell -0.1% month-on-month, while expected to increase by 0.2% month-on-month. The decline in spending was driven by a significant decline in www.avaforexcn.commodity purchases of USD49.2B, only partially offset by an increase in service spending of USD19.9B.
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