### United States
The US dollar is experiencing some consolidation within narrow ranges against G10 currencies but is trading mostly weaker against emerging market currencies. Recent news highlights progress on the US budget bill, which has seen the removal of the controversial “revenge tax” (Section 899), and discussions are ongoing about a dozen prospective trade framework agreements ahead of the July 9 deadline. Additionally, Canada has rescinded its threat to levy a digital services tax, potentially fast-tracking discussions with the US, with hopes for an agreement by July 21.
In the economic sphere, the Chicago PMI and the Dallas Fed’s manufacturing survey will kick off this holiday-shortened week, with Thursday’s release of the June employment report being a focal point. Expectations are set for a slowdown in the labor market, forecasting nonfarm payrolls to decelerate to about 116,000 from 139,000 in May, with the unemployment rate ticking up to 4.3% from 4.2%. Auto sales are also expected to have slowed further in June, marking the third consecutive month of decline since the March surge prompted by tariff-driven forward purchases.
This week will also see Fed Chair Powell participating in an ECB conference alongside ECB’s Lagarde, BOE’s Bailey, BOJ’s Ueda, and Bank of South Korea’s Rhee.
### Eurozone
The euro continues its upward trend, extending its gains to a seventh consecutive session by the end of last week. Today, it remains stable to stronger, trading mainly between $1.1710 and $1.1750, and has not experienced a loss since June 17. Recent data shows the eurozone’s M3 money supply rose by 3.9% year-over-year in May, matching the pace seen in April and mirroring the fastest growth since late 2022. Credit to the private sector increased slightly as well (2.4% vs. 2.3%).
In Germany, the projected budget shortfall for this year is expected to reach around 82 billion euros, significantly higher than the 33 billion euros recorded last year, with a potential rise to 126 billion euros by 2029. The increase is attributed not only to military spending but also to planned infrastructure spending surges to 115 billion euros this year.
### United Kingdom
In the UK, the Labour government made additional concessions in anticipation of tomorrow’s vote on disability welfare reforms to address objections from around 120 Labour MPs. As a result, the 10-year Gilt yield fell by nearly two basis points, although these developments reportedly have made Chancellor Reeves’ position challenging.
### China
China’s economy showed marginal improvement, with the PMI indicating slight progress, and the People’s Bank of China set the dollar’s reference rate at its lowest since last November. Meanwhile, the dollar stabilized against the offshore yuan towards the end of last week, closing firmly near CNH7.1715.
### Japan
In the bond market, Japanese government bonds are experiencing firm conditions, with the 10-year yield slightly declining.
### Canada
Canada has withdrawn its earlier threat to implement a digital services tax, which has catalyzed fresh dialogue with the US. Both parties are hopeful for a resolution by July 21.
### Australia
No specific updates were provided for Australia, reflecting its current stability in market conditions.
### Mexico
No specific updates were provided for Mexico, indicating a stable interaction in market trends.
