30th June 2025

The DOLLAR index made an early downward impression on the 97.000 support level, carving out a new multi-year low down at 96.974, but after visits to the 97.000 area last Thursday and Friday, it is a case of bending, but not breaking yet for the US unit.

Global investors shied away from the US unit once again due to the constant attacks on the Fed and its policies as well as the lack of fiscal responsibility in the Trump budget.

A new estimate from the nonpartisan Congressional Budget Office suggests the Senate version of Trump’s tax and spending measure would add near Usd 3.3tln to US deficits over the next decade.

After a respite in the Usd selling for most of the day, another wave hit heading into the close, which could well be Month (and quarter) end related, as the general consensus was that we would see moderate Usd selling for portfolio rebalancing purposes.

US Treasury Secretary Bessent speaking to Bbg TV stated that he is confident that the fiscal policy bill will progress in the coming hours.

Adding to the criticism of the Fed, Bessent asked why would we borrow long term at these rates and stressed that we could see a lowering of rates, as inflation is "very tame."

Bessent also admitted that the expected January Fed board appointee could eventually become chair, before ruling himself out of the race, as he has "the best job in Washington."

On the subject of trade, Bessent teased that there will be a flurry of trade deals going into the final week before the July 9th deadline, before warning that countries should be aware that we could spring back to April 2 levels on tariffs.

Meanwhile, the Fed's Bostic stated that the advance warning on tariffs has allowed firms to manage the process, but admits that there is still a lot of uncertainty where trade policy will go and that it will take time before full clarity on trade policy emerges.

Bostic remains in the one cut for this year camp, which will not endear himself to the White House administration, as he says that there are more tariff related price increases to come.

Finally, the Chicago PMI fell slightly to 40.4 in June from 40.5, below the 43.0 consensus forecast.

Earlier data showed that UK Q1 GDP remained at 0.7% q/q, while UK mortgage approvals easily beat expectations for May at 63k. The Swiss KOF Leading Indicator was a disappointment falling to 96.1 in June compared to the 99.3 consensus forecast.

Ahead of tomorrow's EZ flash CPI estimate for June, the German report came in softer than expected, with the EU Harmonized y/y rate slowing to 2% y/y.