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Australian Dollar remains stronger as US Dollar weakens on Fed cut bets

by Priya Shah โ€“ Business Editor
written by Priya Shah โ€“ Business Editor

Sydney,Australia โค- โ€The australian Dollar โ€(AUD) is holding firm โ€and evenโ€ gaining โ€‹ground against the US Dollar (USD)โฃ as markets increasingly price in potential interest โฃrateโค cuts โฃby the Federalโ€ Reserve. This shift in โฃexpectations is diminishing the USD’s appeal, โคbolstering demand for currenciesโค like the AUD, traditionally favored for its ties to commodity prices and higher interestโฃ rate environment.

theโข AUD’s resilience comes โขasโ€ economic data suggests aโข cooling US economy, โ€fueling speculation thatโ€Œ the Fed may begin easing monetary policy sooner than previously anticipated.โ€‹ The Reserve Bank of Australia (RBA), simultaneously occurring,โ€ influences โ€interest โขrates โ€to โ€maintain a stable inflation rate of 2-3%, with relatively higher ratesโ€ historically supporting โคthe AUD. This โ€‹divergence in potentialโข monetary policy paths is a key โฃdriver of the current exchange rate dynamics. โ€Œ

Australia’s โคeconomic fundamentals alsoโ€‹ contribute โคto โ€the AUD’s strength.As a major exporterโ€Œ of raw materials, notably iron ore โฃ- accounting for $118โค billion in exports in 2021 – the AUD benefits fromโ€ demandโ€Œ from key trading โ€‹partner โ€ŒChina.Aโ€Œ positive Trade Balance, where exports exceed imports, further strengthens the currency.When the Chinese economy performs well, demand for โ€ŒAustralian goods โขincreases, lifting the AUD.The price of ironโ€‹ ore directly impactsโข the AUD; rising prices generally โ€correlateโ€Œ with a stronger Australian โขdollar due toโ€Œ increased demand.

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Business

US Dollar finds support ahead of consumer confidence data

by Priya Shah โ€“ Business Editor
written by Priya Shah โ€“ Business Editor

US Dollar Gains Ground as Traders Await Key โคConsumer Confidence Report

New York – The US Dollar is finding support in earlyโฃ trading Tuesday as investors cautiously await the release of the latest โ€Œconsumer confidence data, a key indicator of economic health. โ€The dollar index, โ€Œwhich measures the greenback against a basket of major currencies, edged higher amid a generally risk-off sentiment.

The upcoming consumer confidence โคreport is especially notable as โ€the Federal Reserve continues toโ€‹ assessโ€Œ the โคstrength of the USโฃ economy and calibrate its monetary policy.Strong consumer confidence could โ€Œsignal continued economic resilience, potentially bolstering โ€‹the case for the Fed to maintain its current interest rate trajectory orโฃ even consider further tightening. Conversely, a weaker-than-expected reading could โ€Œraiseโ€Œ concerns about aโค potential economic slowdown, prompting speculation about future rate cuts. This โ€data impacts not only currency โ€valuations but also broader market sentiment, influencing investment decisions across asset โขclasses.

The European Central Bank (ECB), headquartered in Frankfurt, Germany, serves โ€as the reserve bank for the Eurozone, setting interest rates and managing monetary policy for the region. Its โขprimary mandate is maintaining price stability, targeting an inflation rate of around 2%. The ECB utilizes interest rate adjustments as โ€Œitsโข main tool, with higher rates generally strengthening the Euro and lower rates weakening it. the ECB Governing Council convenes eight times annually, comprising heads of Eurozone national โ€banks and six permanent members,โค including President Christine Lagarde, to make monetary policy decisions.

In times of โ€‹economic โขstress, the ECB can employ Quantitative Easing (QE), involving theโฃ printing of โ€‹Euros to purchase assets like โ€‹government and corporate bonds from financial institutions. โ€ŒQE typicallyโข leads toโ€ a weaker euro.The ECB has previously utilized QEโ€Œ during the Great Financial Crisis (2009-11), periods of โขlow inflation (2015), and theโ€ COVID-19 pandemic.

Conversely, Quantitative Tightening (QT) represents the โ€Œreversal of QE, implemented during economic recovery and rising inflation. Under QT, the ECB ceases bond purchases โ€and stops reinvesting principal from maturing bonds, generally providing support – orโ€Œ aโค bullishโข outlook – for the Euro.

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Business

US Dollar retreats as focus shifts to inflation data, US-China trade talks

by Priya Shah โ€“ Business Editor
written by Priya Shah โ€“ Business Editor

Dollar Dips as Trade Talks Loom; AUD, NZD Face Policy Decisions

Market Watchers Eye US Inflation Data Amidst Trade Uncertainty

The U.S. Dollar saw a modest decline against major currency rivals early Monday, as investors brace for crucial U.S. Consumer Price Index (CPI) data due Tuesday. All eyes remain on U.S.-China trade discussions ahead of a significant August 12th deadline for a potential agreement.

Dollar Index Weakens, Trump Hopes for China’s Soybean Orders

The Dollar Index is trending lower, approaching the 98.00 mark after experiencing a roughly 0.4% loss last week. President Donald Trump expressed hope on Truth Social that China would significantly increase its soybean purchases from the U.S., aiming to narrow Beijing’s trade deficit. U.S. stock index futures showed a slight uptick, trading between 0.1% and 0.2% higher. This meeting of economic minds coincides with an upcoming discussion on the Ukraine war between President Donald Trump and Russia’s President Vladimir Putin.

AUD/USD Navigates Range Ahead of RBA Decision

The AUD/USD pair is trading within a tight range above the 0.6500 level, having closed the previous week on a positive note. The Reserve Bank of Australia (RBA) is scheduled to announce its monetary policy decisions during the Asian session on Tuesday. Expectations are high that the RBA will implement a 25 basis point rate cut, bringing the policy rate to 3.6% following its August meeting. For context, the Bank of England recently raised its base rate to 5.25% in an effort to combat inflation, highlighting diverging monetary policy paths globally (Bank of England, 2023).

NZD/USD Under Pressure as Tariffs Remain

New Zealand Prime Minister Christopher Luxon indicated early Monday that the U.S. is unlikely to offer any concessions regarding the 15% tariffs imposed on NZ exports. Consequently, the NZD/USD pair is experiencing mild downward pressure, trading slightly below the 0.5950 mark.

Gold Retreats After Failed Bullish Momentum

Gold prices, which climbed above $3,400 on Friday, have failed to maintain their upward momentum. After a week of gains totaling approximately 1%, the precious metal is on the defensive, trading near $3,360 and registering a daily loss exceeding 1%.

EUR/USD Hovers as German and Eurozone Data Approaches

The EUR/USD currency pair is fluctuating within a confined range around 1.1650 during Monday’s European trading session. Key economic indicators for Germany and the Eurozone, including the August ZEW Survey โ€“ Economic Sentiment data, are set to be released on Tuesday.

GBP/USD Holds Steady After BoE’s Hawkish Stance

The GBP/USD pair demonstrated resilience early Monday, trading above the 1.3450 level. This strength follows a more than 1% rise last week, buoyed by the Bank of England’s (BoE) hawkish decision on interest rates.

USD/JPY Lacks Direction Amidst Market Indecision

The USD/JPY pair is struggling to establish a clear direction on Monday, trading within a narrow band just above 147.50.

US Dollar PRICE Last 7 days

The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the weakest against the British Pound.

USD EUR GBP JPY CAD AUD NZD CHF
USD -0.56% -1.30% 0.21% -0.10% -0.60% -0.55% 0.23%
EUR 0.56% -0.70% 0.79% 0.47% -0.17% 0.00% 0.78%
GBP 1.30% 0.70% 1.53% 1.17% 0.53% 0.71% 1.50%
JPY -0.21% -0.79% -1.53% -0.32% -0.97% -0.78% 0.18%
CAD 0.10% -0.47% -1.17% 0.32% -0.66% -0.44% 0.32%
AUD 0.60% 0.17% -0.53% 0.97% 0.66% 0.18% 0.95%
NZD 0.55% -0.01% -0.71% 0.78% 0.44% -0.18% 0.77%
CHF -0.23% -0.78% -1.50% -0.18% -0.32% -0.95% -0.77%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Tariffs FAQs

What are tariffs?

Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.

How do tariffs differ from taxes?

Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.

What are the economic arguments for and against tariffs?

There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.

What is Donald Trump’s stance on tariffs?

During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.

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Business

EUR/USD advances further amid US Dollar weakness, positive ECB data

by Priya Shah โ€“ Business Editor
written by Priya Shah โ€“ Business Editor

Euro Gains Stumble on Tariff Fears

EU Businesses Optimistic Amid US Trade Uncertainty

The Euro is currently testing a crucial resistance level against the US Dollar, fueled by broader market sentiment and a weakening dollar. However, looming tariff disputes between the United States and the European Union are casting a shadow over further gains.

ECB Eyes Economic Outlook Amid Trade Tensions

A recent European Central Bank survey reveals that European businesses maintain an optimistic outlook on the economic landscape. Yet, this optimism is tempered by significant concerns surrounding escalating trade uncertainties. The Euro was trading near 1.1665 at the time of reporting, a level that coincides with a descending trendline and recent highs.

US Dollar Weakens as Treasury Yields Dip

In the absence of major economic data releases from the U.S. on Monday, a shift in risk sentiment is driving the Euro higher while pressuring the US Dollar. Yields on U.S. Treasury notes are experiencing a notable reversal from recent peaks, with the 10-year note falling below 4.40%, thereby increasing downward pressure on the USD.

Trump Escalates Tariff Stance, EU Prepares Countermeasures

Trade negotiations between Washington and the EU remain a significant point of concern, with little concrete news emerging. U.S. Commerce Secretary Howard Lutnick expressed confidence in reaching a resolution. However, President Donald Trump has reiterated a firm August 1 deadline for tariffs, prompting the EU to prepare retaliatory measures should talks falter. President Trump has previously called for tariff baselines between 15% and 20%.

Key Week Ahead: ECB Decision and US Earnings

This week’s highlight will be the European Central Bank’s monetary policy decision on Thursday. While interest rates are expected to remain unchanged, comments from President Lagarde regarding the economic outlook and the potential impact of tariffs will be closely watched. In the U.S., investors are anticipating corporate earnings reports from tech giants like Alphabet and Tesla, alongside defense contractors such as Lockheed Martin, whose revenues may be boosted by increased defense spending.

Technical Outlook for EUR/USD

The EUR/USD pair is currently challenging resistance at 1.1670, where the upper boundary of a descending channel from early July converges with Friday’s high. Technical indicators suggest upward momentum, with the 4-hour Relative Strength Index (RSI) rising above 50. A sustained move above this level could signal a trend reversal, paving the way for further gains towards 1.1700 and 1.1735. Immediate support is noted at 1.1615, followed by the July 17 low at 1.1555.

The EUR/USD pair is testing key resistance levels.

US Consumer Sentiment Improves, Inflation Expectations Decline

Last Friday, the U.S. Michigan Consumer Sentiment Index saw an uptick to 61.8, exceeding forecasts and aligning with recent strong employment and consumption data. Consumers’ inflation expectations, however, have significantly decreased, a factor that could influence the Federal Reserve’s future policy decisions. In a separate development, the Wall Street Journal reported that U.S. Treasury Secretary Scott Bessent advised President Trump against removing Federal Reserve Chair Jerome Powell, citing the potential for economic turmoil.

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Business

EUR/USD Crash: Trump’s Iran Threat Fuels Dollar Surge

by Priya Shah โ€“ Business Editor
written by Priya Shah โ€“ Business Editor

EUR/USD Plunges Amid Geopolitical Tensions and Dollar Strength

The EUR/USD pair experienced a sharp decline, dropping by over 0.60% to trade around 1.1484, as investors flocked to the US Dollar (USD) amid escalating geopolitical tensions in the Middle East.Concerns over a potential broader conflict involving Israel and Iran, coupled wiht uncertainty surrounding US involvement, have fueled demand for the safe-haven Greenback.

Dollar Climbs as Trump Calls for Iran Surrender

Market sentiment soured following former US President Trump’s demand for Iran’s “unconditional surrender” on his social network, further bolstering the USD. the US Dollar Index (DXY), which measures the dollar’s strength against a basket of six major currencies, surged to a four-day high near 98.80, gaining over 0.67%.

did You Know? The US Dollar’s status as a safe-haven currency means it typically appreciates during times of global uncertainty, as investors seek the relative security of US assets.

Reports indicate a potential shift in the US approach to the Middle East conflict, with discussions around possible military action against Iran’s nuclear facilities. This development adds another layer of complexity to the already tense geopolitical landscape.

economic Data and Central Bank Policies Add to Market Volatility

Adding to the market’s unease, recent US economic data revealed a contraction in both Retail Sales and Industrial Production. Retail sales fell 0.9% month-over-month in May, while industrial production decreased by 0.2% according to the Federal reserve. Simultaneously occurring,in the Eurozone,German ZEW data surpassed expectations,but the positive news was overshadowed by concerns surrounding the Federal Reserve’s (Fed) upcoming monetary policy decision and the escalating Middle East situation.

Despite the current downward pressure, some analysts believe the EUR/USD pair could resume its uptrend. However, the Fed’s monetary policy meeting, scheduled for Wednesday, along with the release of its Summary of Economic Projections (SEP) and chairman Jerome Powell’s press conference, are expected to play a crucial role in determining the pair’s future direction.

Key Market movers Impacting EUR/USD

  • US Retail Sales: May’s contraction, primarily driven by a decline in auto purchases, highlights potential weakness in consumer spending.
  • US Industrial Production: The 0.2% decline in May, the second contraction in three months, signals ongoing challenges in the manufacturing sector.
  • Federal Reserve meeting: all eyes are on the Fed’s upcoming meeting, with traders closely monitoring the SEP for clues about future policy direction.
  • US-Eurozone Trade Relations: president Trump’s comments suggest ongoing challenges in reaching a trade agreement with the European Union.
  • German ZEW Data: Positive ZEW data indicates improving investor confidence in the German economy.
  • ECB Comments: ECB officials’ cautious stance suggests a data-dependent approach to future rate cuts.
  • Oil Price Surge: Rising oil prices, fueled by Middle East tensions, could trigger inflationary pressures, perhaps influencing central bank policies.
  • ECB Rate Cut Expectations: Market expectations suggest the ECB is unlikely to cut its deposit Facility Rate at the July meeting.

Technical Analysis: EUR/USD Faces Key Support Levels

The EUR/USD pair’s uptrend faces a test as the current pullback pushes prices below 1.15. The Relative Strength Index (RSI) suggests a weakening of bullish momentum, potentially paving the way for a retracement towards 1.1450 or lower.

Key support levels to watch include the 20-day Simple moving Average (SMA) at 1.1411 and the 1.1400 level. Conversely, a rebound above 1.1500 could see the pair test resistance at 1.1600, followed by 1.1614 and the yearly peak of 1.1631.

Pro Tip: Monitoring key technical indicators like the RSI and moving averages can provide valuable insights into potential trend reversals and support/resistance levels.

Euro FAQs

Question Answer
What is the Euro? The Euro is the currency used by 19 member countries of the European Union, collectively known as the Eurozone.
Who manages the Euro? The European Central Bank (ECB), headquartered in Frankfurt, Germany, manages the Euro and sets monetary policy for the Eurozone.
What is the ECB’s primary mandate? the ECB’s primary mandate is to maintain price stability, typically aiming for an inflation rate of around 2%.
How does inflation data impact the Euro? Higher-than-expected inflation can prompt the ECB to raise interest rates, which generally strengthens the Euro.
What economic indicators influence the Euro’s value? Key indicators include GDP growth, Manufacturing and Services PMIs, employment figures, and consumer sentiment surveys.
How does the Trade Balance affect the Euro? A positive Trade Balance, indicating more exports than imports, typically strengthens the Euro due to increased demand for the currency.

Evergreen Insights on EUR/USD

the EUR/USD currency pair is one of the most actively traded in the world, reflecting the economic relationship between the Eurozone and the United States. Its movements are influenced by a complex interplay of factors, including interest rate differentials, economic growth prospects, and geopolitical events. Historically, the EUR/USD has exhibited significant volatility, providing opportunities for traders but also requiring careful risk management.Understanding the underlying drivers of this pair is crucial for anyone involved in international finance or foreign exchange trading.

Frequently Asked Questions About EUR/USD

  1. Why is the EUR/USD pair so heavily traded?

    The EUR/USD pair represents the two largest economies in the world,the Eurozone and the United States,making it a natural focal point for international trade and investment flows.

  2. What are the main factors that influence the EUR/USD exchange rate?

    Key factors include interest rate differentials between the ECB and the Federal Reserve, economic growth rates in the Eurozone and the US, and geopolitical events that impact investor sentiment.

  3. How does the Federal Reserve’s monetary policy affect the EUR/USD?

    The Federal Reserve’s decisions on interest rates and quantitative easing can considerably impact the EUR/USD. Higher US interest rates tend to strengthen the dollar, putting downward pressure on the pair.

  4. What role does economic data play in EUR/USD movements?

    Economic data releases, such as GDP growth, inflation figures, and employment reports, provide insights into the health of the Eurozone and US economies, influencing investor expectations and currency valuations.

  5. How do geopolitical events impact the EUR/USD pair?

    Geopolitical events, such as political instability, trade wars, and international conflicts, can create uncertainty and volatility in financial markets, leading to shifts in investor sentiment and currency flows.

  6. What are some common strategies for trading the EUR/USD pair?

    Common strategies include trend following, range trading, and using technical indicators to identify potential entry and exit points. Risk management is crucial for all trading strategies.

  7. Where can I find reliable data and analysis on the EUR/USD pair?

    Reputable sources include financial news websites, economic calendars, and research reports from financial institutions. Always verify information from multiple sources before making trading decisions.

What are your predictions for the EUR/USD pair in the coming months? How do you think the Fed’s policy decisions will impact the exchange rate?

Disclaimer: this article is for informational purposes onyl and does not constitute financial advice.Trading foreign exchange involves risk of loss.

Share your thoughts and predictions in the comments below! subscribe for more market analysis and updates.



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Business

AUD/USD Surges Near 0.6450: Weak Dollar & Tariff Worries

by Chief editor of world-today-news.com
written by Chief editor of world-today-news.com

AUD/USD Edges Higher Amid China Data, US PMI Anticipation

The Australian dollar (AUD) is showing resilience against the U.S.dollar (USD) in early trading, with the AUD/USD pair hovering near 0.6445. This upward momentum comes amid mixed signals from China’s manufacturing sector and anticipation of the U.S. May ISM Manufacturing Purchasing Managers’ Index (PMI) release later today.

China’s Manufacturing Sector: A Mixed Bag

Recent data from China presents a nuanced picture of its economic health. While the manufacturing sector shows signs of betterment, other areas are lagging.

  • Manufacturing PMI: Rose to 49.5 in May, up from 49.0 in April, aligning with market expectations.
  • Non-Manufacturing PMI: Declined to 50.3 in May, down from 50.4 in April and below the expected 50.6.

Despite the mixed data, the Aussie has remained relatively firm, suggesting underlying confidence in the Australian economy.

Did You Know?

china is Australia’s largest trading partner, making its economic performance a notable driver for the Australian dollar.

Tariff Uncertainty and the U.S. Dollar

Uncertainty surrounding potential tariffs continues to weigh on the U.S.dollar. The concern is that tariffs could slow economic growth and reignite inflation in the United States.

according to Steve Englander, head of global G10 FX research and North America macro strategy at Standard Chartered Bank NY branch, We’re going to have some tariffing. Maybe not as exciting as was announced on April the 2nd, but we’re still going to get it.

“Sell America” Trade and Fiscal deficit Concerns

The passage of what some call U.S. President Donald Trump’s Big Stunning Bill, which is expected to add trillions of USD to an already high fiscal deficit, has prompted some traders to seek assets outside the U.S. This trend, known as the Sell America trade, reflects concerns about the long-term fiscal health of the United States.

US ISM Manufacturing PMI in Focus

The U.S. May ISM manufacturing PMI will be a key focus for traders. A stronger-than-expected report could limit the USD’s losses and potentially create a headwind for the AUD/USD pair.

Pro tip

Keep an eye on economic indicators from both the U.S. and Australia, and also global trade developments, to better understand potential movements in the AUD/USD pair.

Frequently Asked Questions (FAQs)

What are the main drivers of the Australian Dollar (AUD)?
Key factors include interest rates set by the Reserve Bank of Australia (RBA), the price of iron ore (Australia’s biggest export), the health of the Chinese economy, and overall market sentiment.
How does the Reserve Bank of Australia (RBA) influence the AUD?
the RBA sets interest rates, influencing borrowing costs and the overall economy. Higher interest rates generally support the AUD.
Why is China’s economy vital for the AUD?
China is Australia’s largest trading partner. Strong Chinese economic growth increases demand for Australian exports, boosting the AUD.
How does the price of Iron Ore affect the AUD?
Iron Ore is Australia’s largest export. Higher Iron Ore prices typically lead to a stronger AUD due to increased demand.
What is the trade Balance and how does it affect the AUD?
The Trade Balance is the difference between a country’s exports and imports. A positive trade Balance strengthens the AUD.
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