The US dollar is bid and pushing against some resistance levels ahead of flurry of central bank talk at the ECB conference in Sintra, which includes the new Federal Reserve Chair Warsh. The talks are set to begin around 9:00 AM ET. Given his reluctance to provide forward guidance at his first press conference last month, it seems unreasonable to expect more today. Still, due to Friday’s holiday, June US nonfarm payrolls will be reported tomorrow and the median forecast of 110-115k would be consistent with a recovery from last year’s average of about 10k.
Meanwhile, August WTI and September Brent have made marginal new lows since March today, but benchmark 10-year yields are firmer. Although the offshore yuan is consolidating with a softer bias, the PBOC set the dollar’s reference rate at a new four-year low today. The greenback has extended its gains to new 40-year highs against the yen, while Japanese officials tout their preparedness to act and the close communications with the US. Still, intervention ahead of the US employment report seems minimal.
Prices
G10
• The euro has mostly traded inside last Friday’s trading range (~$1.1355-$1.1435) so far this week. Yesterday, it recorded the session high as Europe was closing and may have been tied to the quarter-end. Since moving back above $1.1380 before last weekend, the euro has held above it so far this week. Options for about 840 mln euros at $1.1375 expire today.
• The dollar was pressed slightly above JPY162.65 yesterday and stayed firm throughout the North American session. It edged up to almost JPY162.85 today. It has barely traded below yesterday’s settlement (~JPY162.55). Intervention ahead of the US employment data seems highly unlikely.
• For the fourth consecutive session yesterday, sterling recorded higher lows and higher highs. It pushed a couple of hundredths of a cent above $1.3275, and eight-day high. It is holding below yesterday’s high today and is meeting resistance near yesterday’s settlement. Yesterday’s low was slightly below $1.3215 and additional support is seen around $1.3190.
• The Canadian dollar is chopping near its lowest level since last April. The US dollar stalled like it did last week, slightly shy of CAD1.4250. Options for almost $500 mln at CAD1.4260 expire today. The key question is whether this is a double top or part of a choppy consolidation that proceeds another leg up. We are inclined toward the latter. The next interesting chart area is around CAD1.4300.
• The Australian dollar posted a potential key reversal yesterday by making a new low for the move and then recovering and settling above Monday’s high. It approached but held above the 200-day moving average (~$0.6865 today) and has not traded below it since last November. The next technical target is in $0.6950-75 area. However, there has been no follow-through buying today, and the Aussie has been pushed back to slightly below $0.6885 today. Given the position of the intraday momentum indicators, the low may not be in place for the day. That said, re-establishing a foothold above $0.6900 would help stabilize the tone.
EM
• The Mexican peso continued to consolidate yesterday. The dollar scratched below last Friday’s low (~MXN17.43) but settled firmly but below MXN17.50. The greenback has risen to almost MXN17.5475 today. Nearby resistance is seen around MXN17.56-MXN17.5850. The Colombian central bank surprised the market yesterday with a 75 bp hike (to 12%). It cited the tight labor market and above target inflation (5.8% in May). It is the first increase since March, and follows a court ruling that blocked the government from interfering with the rate decision. The Colombian peso rallied 1% yesterday and rose 10.5% in H1 26 to lead the emerging market currencies higher.
• The offshore yuan posted its highest settlement in six sessions yesterday. The dollar found support ahead the 20-day moving average (~CNH6.7830). It has not closed below it in two weeks. The greenback is trading firmly and is probing the CNH6.80 area today even though the PBOC set the dollar’s reference rate at a new four-year low toward of CNY6.8067 (CNY6.8019 yesterday and CNY6.8195, a week ago).
• The Indian rupee fell for the third consecutive session today, and its 0.6% loss, despite the central bank’s intervention, was the largest since June 8. The dollar rose to INR95.2925, its highest level since June 12.
Other Markets
• Most of the large equities markets finished the Q2 on an up note. Last week’s five-day decline in the S&P and Nasdaq has kindled new buying interest. The S&P 500 slipped about 1% last month, while the MSCI Asia Pacific Index fell a little more. Europe’s Stoxx 600 rose by about 2.5%. Today’s the large bourses in the Asia Pacific region were mixed, while Europe’s Stoxx 600 is slightly heavier after gaining almost 0.9% yesterday. US index futures are around 0.25%-0.50% lower.
• The US 10-year yield rose nine basis points yesterday in the back-to-back increase in three weeks and the largest single day rise since mid-May. It bottomed near 4.35% yesterday and is near 4.47% now. Despite the heavier oil prices, benchmark 10-year yields are firmer today. They rose 2-6 bp In Japan and then Antipodeans and are 2-4 bp higher in Europe.
• Gold recovered from its lowest level since last November (~$3943) yesterday. It settled near $4008. It is consolidating today. It has held below $4020 and above $3960. A move above $4100 would help stabilize the technical tone. Silver’s price action was stronger. It recorded an outside up day by trading on both sides of Monday’s range and settling above its high. Yet, it failed to close above $60 despite the intraday penetration and retreated to slightly below $57.20 today.
• August WTI traded on both sides of Monday’s range yesterday, and although it settled inside Monday’s range, the technical tone looks poor. The consolidation within last Friday’s range (~$68.55-$71.85) looks to be some kind of continuation pattern. Indeed, it has slipped to a marginal new low since March today, almost $68.20. Recall that before the war, the contract settled at $65.70.
Data
• Challenger’s estimate of US June job cuts was announced earlier today. They are down 4.5% year-over-year compared with increase 3.4% in May. The ADP private sector jobs estimate may be the most impactful of today’s US data points. Through May, it shows the private averaged 73k jobs a month, while pending revisions, the BLS estimate is 106k. The median in Bloomberg’s survey is for 120k increase in today’s ADP report. The final manufacturing PMI will be overshadowed by the ISM manufacturing. The PMI has increased in five of the first six months of the year and at 55.7 (preliminary) in June, it is at a four-year high. The ISM manufacturing index rose in three of the past six months to 54.0, which is also the highest in four years. Lastly, May construction spending will be reported. It tumbled by about 1.7% in the first two months of the year and rebounded by a cumulative 0.6% in the past two months. May spending is seen rising by 0.2%.
• Mexico has a full slate of reports today. Worker remittances, the number one source of hard currency, are expected to have rebounded to around $5.56 bln in May from $4.98 bln in April. In the first four months of the year, worker remittances totaled $19.5 bln compared with $19.02 bln in Jan-Apr 2025. While some real sector data have shown that the Mexican economy likely stabilized recently after it contracted by 0.6% quarter-over-quarter in Q1. Still, the June manufacturing PMI and IMEF surveys are expected to have remained below the 50 boom/bust levels.
• The final eurozone manufacturing PMI drew little attention. It ticked up to 51.4 from the flash reading at 51.3. After rising in the first four months of the year, the eurozone manufacturing PMI pulled back in May and June. New orders rose and, while they remain elevated, the rise of input costs slowed. More importantly, the preliminary June CPI was softer than expected at 2.8% down from 3.2% and below the 3.0% median forecast in Bloomberg’s survey. The core rate slipped to 2.4% from 2.6%. The inflation report lent more credence to ideas that after the hiking rates in June, the ECB is seen on hold at the July 23 meeting. That said, the market is confident of a follow-up rate hike in Q4 (22.5 bp discounted).
• The UK’s final June manufacturing PMI stands at 52.5 rather than the 53.1 initial estimate and 53.9 in May. It was the first decline in three months. It finished Q4 25 at 50.6 and was at 51.0 at the end of Q1 26.
• Australia’s manufacturing PMI ended last year at 51.6. It rose to 52.3 in January, but three rate hikes later and it is at 51.5 in June, which is a little better than the preliminary estimate of 51.2. Separately, building approvals were 1.1% in May after a revised 0.2% decline in April (initially -3.4%).
• Japan’s housing starts rose for the first time this year in May but did not even recoup the losses in April. The year-over-year surge (33.9%) reflects the soft patch hit in Q2 25. The final June manufacturing PMI confirmed the improvement to 54.8 (54.9 in the preliminary estimate) from 54.5. More important was the Q2 Tankan Survey. Sentiment edged higher and among the large manufacturers, the results appeared to be the best since 2018. Most impressive was the jump in capex intentions for this fiscal year (11.5% vs. 3.3% in Q1).
• China’s RatingDog’s June manufacturing PMI edged lower to 51.7 from 51.8. It tends to run a little faster than the “official” one, which rose to 50.1 in June from 50.0 in May.
Reviewed by Marc Chandler
on
July 01, 2026
Rating:
