United States of America

USD is weakening against its main competitors – EUR. JPY, and GBP.

Today is Independence Day in the United States, so financial institutions are closed, and investor activity is reduced. It is only worth noting the yesterday publication of the minutes of the June meeting of the US Federal Reserve, according to which officials recognized the slowdown of the economy and a decrease in price pressure and noted a reduction in the growth rate of wages and the cost of products of large companies. However, the regulator did not change monetary policy, waiting for new economic data that would confirm that inflation is steadily approaching the target level of 2.0%. Currently, most investors expect the US Fed to cut borrowing costs by 25 basis points for the first time at its September meeting.

Eurozone

EUR is strengthening against USD and GBP but weakening against JPY.

Today, the minutes of the last meeting of the European Central Bank (ECB), which took place in early June, were published: according to the document, most officials are confident that inflation will continue to decline, but some members of the regulator’s board expressed concern about the too slow reduction in consumer price growth and stated that there are grounds for maintaining current interest rates. There were more supporters of the beginning of easing monetary policy, but the accompanying statement indicated that new signs of accelerating inflation would complicate further adjustment of borrowing costs. However, the regulator maintained its previous forecast, according to which consumer prices will adjust to a target of 2.0% by 2025. We should also note comments from ECB chief economist Philip Lane, who today said that wage growth, according to business surveys, is beginning to slow and is forecast to continue this trend in 2025–2026.

United Kingdom

GBP is strengthening against USD but weakening against JPY and EUR.

Today, June data on the Construction PMI were published: the index decreased from 54.7 points to 52.2 points, with preliminary estimates of 54.9 points. Thus, the business activity is growing, although at a slower pace than before, and its deterioration was caused by a decrease in the volume of new orders, which, in turn, was a consequence of the uncertainty in the economy before the parliamentary elections. They are taking place today, but generally do not affect the market, since investors are confident that even if the ruling party changes, significant changes in economic policy are not expected. We should also note today’s publication of the results of a survey of business representatives on projected wage growth conducted by the Bank of England: the majority of respondents believe that over the next 12 months the figure will grow by 4.2% instead of the 4.5% previously expected.

Japan

JPY is strengthening against its main competitors – EUR, GBP, and USD.

In the absence of significant economic releases, the movement of the yen is determined by external factors. Despite the current strengthening of its position, the medium-term fundamental background remains negative: Bank of Japan interest rates are still significantly lower than in other developed countries, and the regulator is in no hurry to raise them again due to the current weakness of the national economy. Let us remember that in Q1 2024 it decreased by 0.5% QoQ, approaching the brink of recession. According to June data, the Composite PMI fell to 49.7 points, finding itself in the stagnation zone, which does not allow investors to hope for an early resumption of economic growth. In these conditions, the government's currency interventions could contribute to the strengthening of the yen, but so far officials have not taken active action.

Australia

AUD is strengthening against GBP, EUR, and USD and has ambiguous dynamics against JPY.

Today May foreign trade data was published, which turned out to be generally positive: exports increased by 2.8% after a correction of ˗2.2%, and imports by 3.9% compared to ˗7.0% a month earlier, while the trade surplus slowed to 5.773 billion Australian dollars. The renewed increase in exports and imports in the Australian economy contributes to its further growth and strengthens the position of the national currency.

Oil

Oil prices today have ambiguous dynamics: the morning decline gave way to growth.

The medium-term fundamental background remains positive: the growth of quotations is supported by a serious reduction in petroleum product inventories in the United States, as well as hopes for an early transition by the American regulator to easing monetary policy. The report published yesterday by the Energy Information Administration of the US Department of Energy (EIA) recorded a decrease in commercial oil reserves by 12.157 million barrels, gasoline by 2.214 million barrels, and distillates by 1.535 million barrels. The volume of reduction significantly exceeded expert calculations and demonstrated an increase in demand for petroleum products in the first world economy. The minutes of the latest meeting of the US Federal Reserve confirmed that US officials expect a further slowdown in inflationary pressure, which will allow them to move on to interest rate adjustments as early as September.