The US Dollar spent the week under pressure and is now on course to close with a 0.50% loss. The US Dollar Index (DXY) is changing hands around the 100.90 zone, and attention now shifts to a US calendar that is light on releases but heavy on importance for where the Greenback goes next.
Monday delivers the final S&P Global Services PMI along with the ISM Services PMI. Tuesday brings the trade balance figures. The main event, however, lands on Wednesday with the FOMC Minutes. These are the records of the Federal Reserve's June meeting, and notably the first gathering held under Chair Kevin Warsh. The minutes could reveal whether policymakers still intend to keep policy restrictive or are beginning to soften that stance.
How the Dollar Sits in Currency Markets
Against the major currencies, the Dollar is showing its greatest strength versus the Japanese Yen. USD/JPY is trading near the 161.40 level, having touched 162.84 earlier this week, a 40-year high. If the Dollar keeps climbing, the Yen could face further strain. But should US data come in on the softer side and markets begin pricing a less restrictive Fed, the pair's upside may be capped. As long as USD/JPY hovers near these multi-decade highs, the risk of intervention will also stay on the radar.
Sterling held up well, with GBP/USD sitting just in positive territory around 1.3350 on Friday even as the Greenback swung back and forth. With expectations of Fed rate hikes cooling and US markets shut for the Independence Day holiday, Cable stayed on track for a solid weekly gain.
The Euro told a similar story. EUR/USD clung to its recent advance and consolidated near 1.1440 into the close of the week, with the Dollar lacking any clear direction. Trading conditions stayed muted, and volatility was kept in check by the US market holiday.
Gold Shines for a Third Straight Session
Gold (XAU/USD) is trading higher near the $4,175 level. If US yields slip and the Fed minutes reinforce bets that the central bank will not hold policy tight for much longer, the metal could gain more ground. A sharp Dollar rebound, on the other hand, would likely blunt that momentum.
On Friday, gold extended its recovery for a third consecutive day, edging toward $4,200 per troy ounce. The metal now looks set to break a four-week losing streak, largely because June's Non-Farm Payrolls (NFP) came in softer than expected. That data pushed investors to scale back their expectations of further Fed tightening.
Crypto Regains Some Energy
Bitcoin has kept its upward push intact, holding above the $61,000 mark at the time of writing on Friday. Major altcoins including Ethereum and Ripple also advanced, pointing to a modest lift in market sentiment and a fresh appetite for risk among investors.
The Iran War and the Oil Question
Nearly four months into the Iran war, the US economy is proving remarkably resilient. The conflict at first jolted global energy markets and drove oil prices sharply higher. Since then, though, diplomatic progress between Washington and Tehran has eased fears of a drawn-out supply shock.
What Sintra Left Behind
Financial markets arrived in Sintra hoping for hints about the Federal Reserve's next move. For the most part, they walked away with confirmation that Chair Kevin Warsh intends to make those hints far harder to read. That is exactly why all eyes have now turned to Wednesday's minutes, which may finally offer a clearer picture.
