In June, United States durable goods orders excluding transportation increased by 0.2%, surpassing forecasts of 0.1%.
The EUR/USD remains above 1.1700, albeit under slight negative pressure, while GBP/USD targets the 1.3400 mark due to disappointing UK retail sales data.
Gold is experiencing negative pressure for the third consecutive day, dropping to weekly lows near $3,330 per troy ounce. The US Dollar’s strength and mixed yields contribute to the bearish sentiment in the gold market.
Cryptocurrency Market Update
In the cryptocurrency market, Bitcoin saw a decline to an intraday low of $114,723, but signs of recovery are emerging. Ethereum and XRP have maintained key support levels amid the market’s de-risking sentiment.
The Federal Reserve is under scrutiny for delaying rate cuts amidst ongoing tariff uncertainties, though the resilient economy provides some justification. Despite this, questions arise regarding potential delays amid labour market concerns.
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Given the recent strength in underlying business investment, we believe the Federal Reserve has enough justification to maintain its cautious stance on interest rates. The latest non-farm payrolls report showed the addition of 272,000 jobs in May, far exceeding expectations and reinforcing the case for delaying any policy easing. This economic resilience suggests that a “higher for longer” interest rate environment is the most likely scenario.
Currency And Asset Outlook
This policy outlook continues to fuel US Dollar strength, with the Dollar Index (DXY) recently holding firm above the 105.5 level. Consequently, we anticipate continued pressure on the EUR/USD, especially since the European Central Bank began its rate-cutting cycle in early June. Derivative strategies favouring the greenback against the single currency appear prudent in the coming weeks.
We also see potential weakness for the British Pound, even with the recent rebound in UK retail sales. The Bank of England faces persistent inflation that complicates its own path, creating a policy divergence with the more hawkish American central bank. Historically, this divergence tends to weigh on the GBP/USD pair, which is currently struggling below the 1.2700 mark.
The combination of a strong dollar and firm Treasury yields, with the 10-year note hovering around 4.25%, creates significant headwinds for gold. The precious metal, now trading near $2,320 per ounce after failing to hold higher ground, becomes less attractive as the opportunity cost of holding a non-yielding asset rises. We expect this pressure to cap any significant rallies in the commodity.
In the cryptocurrency space, the broader sentiment of de-risking is evident as Bitcoin struggles to maintain its position above $64,000. Historically, periods of tight monetary policy and a strong dollar tend to reduce investor appetite for highly speculative assets. Therefore, we advise caution, as digital assets may see further downside if macroeconomic uncertainties persist.
