### United States
The US dollar is showing weakness against a majority of G10 and emerging market currencies. Despite recent data pointing to increased foreign investment in US securities, Federal Reserve Governor Waller’s call for a rate cut seems to have dampened demand for the dollar. Other developments, including the imposition of a 93.5% tariff on Chinese graphite, are likely to increase costs for the US electric vehicle battery sector. On the stock market front, most equities are performing well, following record-breaking sessions for the S&P 500 and Nasdaq. US index futures are also showing stability with a slight upward trend. Meanwhile, the 10-year US Treasury yield has softened slightly to 4.44%, up about three basis points for the week. Gold is trading at around $3,353, within a well-worn range, and crude oil prices are seeing a bump, with August WTI trading near $68.50, influenced by new EU sanctions on Russia. The Dollar Index reached a recovery phase with an index value of 98.95 but failed to see follow-through buying, trading lower and confined within a range of 98.30 to 98.60.
### Eurozone
The euro ended a six-day slide and then faced selling pressure once more, briefly dipping to its lowest point for the month at above $1.1555. It rebounded somewhat, trading near $1.1645 in late morning European markets. The current account surplus for May was reported at 32.3 billion euros, averaging this year’s monthly surplus to approximately 25.1 billion euros, down from the previous year’s average of about 36.3 billion euros. While the current account surplus has narrowed, the eurozone has seen a widening trade surplus, with an average monthly trade surplus of 18.55 billion euros this year. Construction activities showed a dip, falling by 1.7% in May after a significant rise in April of 4.3%, driven largely by EU and government incentives.
### United Kingdom
Recent data points from the United Kingdom have not been particularly favorable. The British economy experienced a second month of contraction in May, coupled with higher-than-expected inflation and weaker employment figures recently. The pound’s slide of eight days paused mid-week but resumed while maintaining some resilience above its recent low of $1.3365. Market expectations for the year-end interest rate have risen, reflecting a more hawkish outlook. Sterling traded in a confined range between $1.3410 and $1.3445, with slight upward bias potentially signaling a technical stabilization if it can breach $1.3465.
### China
The yuan has shown modest gains against the US dollar this year, rising about 1.6%. The People’s Bank of China (PBOC) set the dollar reference rate at CNY7.1498, moderately down compared with previous fixings. Despite some movement allowed in the yuan, it remains broadly stable against the US dollar. Market dynamics were shaped by official interventions, with the PBOC using the daily reference rate as a tool to manage exchange rate fluctuations. The yuan’s recent movements reflect a controlled and intentional management strategy aimed at maintaining stability rather than promoting a strong or weak currency stance.
### Japan
The Japanese yen has maintained some stability against the dollar, trading below JPY149 but showing potential for further consolidation. The country’s June CPI figures aligned largely with earlier indicators, presenting lower inflation rates than previously observed. The core inflation rate slowed to 3.3% from earlier highs, with a surprising rise in measures excluding fresh food and energy. Focus may soon shift to Tokyo’s July CPI release. A domestic political shift is also unfolding, as the ruling coalition faces potential losses in upcoming elections, with differing policy platforms regarding economic relief measures affecting households.
### Canada
The Canadian dollar showed a slight downtick, with the greenback forming a base near CAD1.3670 and peaking at a new monthly high around CAD1.3775. The Canadian dollar has realized relative outperformance in cross-currency pairs this month, losing only marginal value against the US dollar. The market outlook regarding rate cuts by the Bank of Canada has shifted more hawkishly, as year-end expectations have climbed by nearly 15 basis points. The recent movements have created a pattern of consolidation, hinting that the Canadian dollar may continue its relative strength in the short term.
### Australia
Australian employment figures came in below expectations, leading to a dip in the Aussie dollar to a monthly low of around $0.6455, testing a significant retracement level. Despite this downturn, subsequent trading has seen the currency recover slightly above $0.6520, limiting potential for further losses without significant North American market intervention. The broader market sentiment indicates a pullback following a strong prior month of gains, potentially leading to cautious trade as economic data adjusts investor expectations.
### Mexico
The US dollar’s trading range against the Mexican peso has remained tight, fluctuating between MXN18.65 and MXN18.8850. These levels mark the upper bounds for the month, while the peso continues to benefit from higher interest rate differentials. Mexican currency returns further shine from reduced dollar strength and attractive carry trade dynamics. However, some apprehension about upcoming economic events at the start of August has prompted traders to remain cautious, making further volatility possible in the currency pair.
