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US equity futures point lower as markets digest Trump’s $3.4 trillion tax plan approval and fresh tariff warnings ahead of the July 9 deadline. USD softened, while safe-haven currencies gained. With US markets closed for Independence Day, traders are cautious, avoiding long USD positions amid heightened volatility risks.
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GBP
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Following public endorsement of Rachel Reeves remaining as Chancellor, the GBP experienced a modest recovery. However, yields on UK government securities continue to trade at elevated levels, reflecting persistent investor caution concerning the country’s fiscal policies and political stability. This cautious outlook suggests that despite the rally, uncertainty lingers over economic prospects.
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USD
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June’s employment figures showed continued strength, marking the fourth consecutive month of robust job additions and a drop in the unemployment rate, giving the USD initial momentum. This pushed Treasury yields higher as investors pared back bets on a third Federal Reserve rate reduction this year. Still, the USD’s advance lost steam later after the ISM services report came in with mixed results—while overall activity and new orders exceeded expectations, weaker readings on prices and hiring weighed on sentiment.
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EUR
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The EUR extended its rally today, underpinned by continued USD weakness amid US tariff worries and sprawling federal debt CB officials are now carefully monitoring the currency’s 14% year-to-date gains though they haven’t hit alarm levels.
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JPY
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The JPY strengthened modestly today as safe-haven demand picked up ahead of the US tariff deadline on July 9, with USD/JPY slipping. Solid domestic data, including a stronger-than-expected rise in household spending, provided additional support. However, gains remain capped as the wide interest rate gap between Japan and the US continues to weigh on the currency, leaving it vulnerable to swings in risk sentiment and potential summer volatility.
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During the overnight session, President Trump reiterated his commitment to reinstating elevated tariffs by July 9 and cast doubt on progress with Japan, stating uncertainty around reaching a trade agreement. Despite the renewed trade tensions, overall market sentiment remains constructive, with risk appetite intact and a steady tone across major indices as the day kicks off.
The USD opened the session on firmer footing, supported by anticipation surrounding the upcoming ADP employment report. Should the data surpass expectations once again, it may provide additional short-term momentum for the USD.
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HOW WE CAN HELP
Our experienced currency team is here to ensure you make the most of your international transfers. By gaining a clear understanding of your goals, we offer personalised support and recommend the most suitable strategies to help you navigate the currency market with confidence. Get in touch with Osman Hanif today on +44 (0) 20 3371 9200 or email osman@magnafinancial.com
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