The dollar fell and U.S. Treasury yields edged lower as reports said U.S. President Donald Trump was considering appointing the next Federal Reserve chair early, with markets betting on earlier-than-expected U.S. interest rate cuts.
The Bloomberg Dollar Index dropped 0.3% to its lowest level since April 2022, with the dollar weakening against both the Japanese yen and the Taiwan dollar. Yields on US Treasuries of all major maturities declined, with the 10-year Treasury yield falling 2 basis points to 4.27%.
Previously, The Wall Street Journal reported that Trump might announce the successor of Federal Reserve Chair Jerome Powell in September or October. This appointment is unusually early and could actually give rise to a shadow Fed chair who can influence market sentiment. This further supports market expectations that the pace of US interest rate cuts will be faster than previously expected.
Mahabir Zaman, head of foreign exchange research at ANZ Bank Group, said: “Trump has been talking about cutting interest rates, so he will choose someone who shares his view. Whoever he announces as the winner is likely to take a dovish stance and could further boost the US dollar.”
In early trading, the regional stock market composite index rose by about 0.4%. However, the performance of individual stock markets varied: the Chinese mainland stock market declined slightly, while the South Korean stock market fell after a recent rally.
Oil prices rose for a second consecutive day as investors struggled to cope with the unstable ceasefire situation in the Middle East. Despite the stabilization of oil prices, the oil market remains volatile. Russia is willing to increase production again at the next OPEC+ meeting, and Trump’s remarks on sanctions against Iran have also raised concerns.
Fed governors Christopher Waller and Michelle Bowman recently hinted that they would be willing to cut interest rates as early as July if inflation remains under control. But Powell remains cautious: on Wednesday, he told a Senate committee that the impact of rate hikes on inflation is “very difficult to predict”. Earlier this week, he reiterated that the Fed doesn’t need to rush to cut rates.
“Without the uncertainty brought about by the shift in trade policy, the Federal Reserve might have been able to cut interest rates this summer,” said Carol Schleif of BMO Private Wealth. “The Fed’s pause in rate cuts is due to tariffs and does not necessarily reflect an improvement in the economic situation. We expect one or two rate cuts in 2025, most likely starting in September.”
Elsewhere, Hong Kong’s de facto central bank spent over a billion dollars propping up the city’s currency, as its linked exchange rate system came under strain due to fluctuations in the US dollar.
Technical analysis:
Gold: The pullback of the US dollar supported the gold price from hitting a new low in the current stage. Pay close attention to the key battle at 3340/45 within the day. Once the bulls recapture this level, the main strategy for the day will be to use the pullback to the new demand zone as an opportunity to buy. For detailed positions, please consult the plugin.
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg and note “666” in the message.
The Nasdaq: The price has been consolidating above 22,000 over the past 24 hours. If the market continues to react to the factor of the Fed Chair’s early replacement, the price may rise further. However, the entry strategy would tend to be buying after a pullback or buying on a rebound after liquidity below 22,150 is refreshed. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the chart, please contact V: Hana-fgfg and note “666” in the message.
Crude oil: It has remained within a narrow range over the past 24 hours and has not triggered our buy conditions. It is advisable to wait for a breakout signal of momentum within the day before placing a limit order to buy at a lower price. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg and note “666” in the message.
Today’s key financial data and events to focus on:
18:00 UK June CBI Retail Sales Expectations Index
20:00 Richmond Fed President Barkin will speak at the New York Association for Business Economics.
20:30 US Q1 Final Real GDP (Annualized Quarterly Rate)
20:30 U.S. Seasonally Adjusted Initial Jobless Claims (in thousands) (to June 21)
20:30 US May Durable Goods Orders (MoM) Preliminary Estimate
At 21:00, Loretta J. Mester, President of the Federal Reserve Bank of Cleveland, delivered the opening remarks at an event.
