Investors and forex traders remain focused on the prospects for further monetary policy tightening by the US Federal Reserve. In this regard, it is worth noting the latest comments from Chicago Federal Reserve Bank President Austan Goolsbee, who questioned whether the factors driving consumer price growth are temporary. He suggested that rising price pressures, especially in the services sector, may not be linked solely to higher trade tariffs and the energy crisis but could have deeper underlying causes. He also agreed with US Federal Reserve Chair Kevin Warsh on the importance of providing guidance that allows markets to interpret the regulator’s future actions, as it may otherwise be misunderstood by traders and ultimately undermine confidence in monetary policy decisions. In addition, market participants remain focused on the de-escalation of the Middle East conflict. It should be recalled that representatives of the United States and Iran agreed on a 60-day roadmap. Moreover, the US Treasury Department suspended a number of sanctions on Iranian oil, indicating the White House’s serious intention to end the Middle East crisis as soon as possible, although President Donald Trump reiterated that hostilities could resume if the Iranian authorities fail to fulfil their part of the commitments.
Eurozone
The euro is weakening against its major counterparts, including the yen, the pound, and the US dollar.
Preliminary June business activity data released today were generally weak. The manufacturing indicator declined from 51.6 points to 51.3 points, while the services index rose from 47.7 points to 48.9 points, exceeding analysts’ expectations of 48.6 points but remaining in contraction territory. The composite indicator increased from 48.5 points to 49.5 points, confirming continued pressure on the European economy. Similar data from Germany showed a decline from 48.1 points to 46.8 points in manufacturing and from 50.1 points to 50.0 points in services, compared with forecasts of 49.0 points and 50.3 points, respectively. It is also worth noting the latest comments from European Central Bank (ECB) Chief Economist Philip Lane, who said today that inflation in the eurozone could remain above the 2.0% target even if a peace agreement between the United States and Iran is reached soon. These remarks confirm the potential readiness of European officials to raise borrowing costs further.
United Kingdom
The pound is strengthening against the euro but weakening against the yen and the US dollar.
Market participants are focused on preliminary June business activity data. In the manufacturing sector, the indicator declined from 53.9 points to 53.1 points, falling more sharply than analysts had expected at 53.5 points. In the services sector, it dropped from 49.3 points to 48.7 points against a forecast of 50.1 points, marking the sharpest decline since January 2023. The composite indicator decreased from 49.7 points to 49.4 points, compared with preliminary estimates of 50.6 points. Today, the Confederation of British Industry (CBI) industrial orders index was also released. The indicator continued its decline from –41.0 points to –45.0 points, reaching its lowest level since September 2020.
Japan
The yen is strengthening against the euro and the pound but is showing mixed dynamics against the US dollar.
Preliminary June business activity data released today supported the national currency. The manufacturing indicator rose from 54.5 points to 54.9 points, while the services index increased from 50.0 points to 51.8 points. The composite indicator climbed from 51.1 points to 52.5 points. Analysts note that the positive momentum was driven by a recovery in domestic new orders, which was the strongest in the past four years. In addition, June data on the Bank of Japan’s core Consumer Price Index showed a decline from 2.8% to 2.7%; however, the figure remained well above the regulator’s 2.0% target, allowing policymakers to continue tightening monetary policy.
Australia
The Australian dollar is weakening today against its major counterparts, including the euro, yen, pound, and US dollar.
Preliminary June business activity data published today were generally positive for the Australian economy. The manufacturing indicator rose from 50.7 points to 51.2 points, while the services index increased from 48.7 points to 49.9 points, confirming economic resilience amid the current crisis conditions. Against this background, tomorrow’s release of May inflation data may be decisive for the Reserve Bank of Australia (RBA). The weighted median Consumer Price Index is expected to rise from 4.2% to 4.3%, which could allow monetary authorities to adopt more hawkish rhetoric and support the national currency.
Oil
Oil prices continue to decline after the US Treasury Department temporarily suspended a significant part of the sanctions imposed on Iran’s oil industry. In particular, the Islamic Republic is now allowed to trade crude oil in US dollars, which has not been seen for more than 40 years. Experts believe that this White House decision could allow Iran to bring an additional 67.0 million barrels to the market, potentially increasing budget revenues by USD 8.0–9.0 billion. It is worth noting that, according to US President Donald Trump, oil revenues will, among other things, be directed toward purchases of US agricultural products rather than financing the rebuilding of the military.
The increase in vessel traffic through the Strait of Hormuz is also contributing to lower prices. According to Bloomberg estimates, the number of ships passing through the strait reached twelve during today’s incomplete trading day alone. However, this remains significantly below pre-crisis levels, when up to 135 large vessels passed through this key waterway each day on average.
