Forexlive Americas FX news wrap 1 Jul: JOLTs job openings rise.Powell say economy is solid

The USD started the US session on its back foot once again. The EURUSD and the GBPUSD both traded at new record highs for 2025 (lower USD). However, JOLTS job openings were solid and above expectations (7.769 million versus 7.300 million estimate). ISM data was okay (49.0 versus 48.8 estimate and 48.5 last month).

Fed Chair Powell speaking at the ECB Forum in Sintra, Portugal did not rule out a July cut, but he was not exactly encouraging about the possibility. He is to be conciliatory toward his nemesis Pres. Trump who continues to criticize the chairman’s reluctance to cut rates.

Powell today acknowledged that the:

• U.S. economy is in a good position and that, aside from tariff effects, inflation is at a favorable level.
• He noted that higher inflation readings are expected this summer due to tariffs,
• He suggested the Fed might have already cut rates were it not for that added risk.
• He reaffirmed the Fed’s commitment to a data-dependent, meeting-by-meeting approach and did not rule out a rate cut in July of.
• He emphasized the need to monitor inflation and labor market data closely.
• On fiscal issues, he acknowledged that the U.S. debt path is unsustainable and needs to be addressed.

Oh, and he declined to comment on his future at the Fed but advised his eventual successor to avoid political entanglement.

From the other central bankers:

• ECB President Christine Lagarde stated that the euro area has achieved its 2% inflation target, but emphasized the need to remain vigilant. She reiterated the ECB’s data-dependent stance, noting decisions will be made meeting by meeting, without committing to a particular rate path. On a broader level, she warned that any significant shift in the global role of the U.S. dollar would take considerable time. Lagarde also voiced deep concern about the erosion of truth in the digital era, citing AI and manipulated public opinion as emerging threats to data integrity.

• Bank of England Governor Andrew Bailey said inflation pressures remain, and the possibility of second-round effects is being watched closely. He noted signs of economic and labor market softening and believes the general direction for interest rates is still downward. While it’s too early to assess the full impact of tariffs, he warned of potential pressure on demand and supply chains. Bailey emphasized that policy remains restrictive but expects it to gradually become less so, moving toward neutral. He added that the concept of “restrictiveness” is central to BoE thinking and advised his successor to maintain humility.

• Bank of Japan Governor Kazuo Ueda highlighted that although headline inflation has been above 2% for nearly three years, underlying inflation remains below target. He said any future rate hikes will depend on the overall inflation dynamic, including wage growth and expectations. Ueda noted Japan’s current policy rate is still below the neutral level and steered clear of commenting on trade negotiations.

The central bank commentary and US data, helped to reverse the USD with larger declines either erased or reduced. The USD is ending the day mixed vs the major currencies. Below are the % changes of the USD vs the major currencies:

• EUR -0.11%
• JPY -0.32%
• GBP -0.08%
• CHF, -0.18%
• CAD, +0.26%
• AUD, unchanged
• NZD, unchanged.

US yields moved higher, especially in the shorter end, after starting the US session lower. The 30 year did fall marginally:

• 2-year yield 3.774%, +5.3 basis points
• 5-year yield 3.831%, +3.8 basis points
• 10-year yield 4.241%, +1.6 basis points
• 30-year yield 4.763%, -1.1 basis points

U.S. stocks ended the day mixed, with the Dow Jones Industrial Average and small-cap Russell 2000 posting gains, while the S&P 500 finished near flat and the NASDAQ closed lower. The divergence reflected a rotation of capital out of large-cap tech stocks and into small-cap equities and industrial names, favoring the more cyclical components of the Dow

• Dow +0.91%
• S&P index -0.11%
• NASDAQ index -0.82%
• Russell 2000 +0.94%

IN other markets:

• Crude oil futures remain in a $64 to $66.33 range. It is currently trading up $0.45 at $65.56. That level is $0.30 above the 100-hour moving average at $65.26. Traders are waiting for the next shove.
• Gold prices rose $36.98 were 1.12% to $3340.15.
• Bitcoin fell by $1418 to $105,761.

In popcorn eating news,

• Pres. Trump and Elon Musk exchanged barbs once again, but refrained from going too far. Nevertheless, Trump did say that perhaps Elon needed to be “DOGED” and that it would save the taxpayers lots of money.
• Trump also threatened Japan with tariffs of 30-35% and he did not see a deal being done before July 9th deadline
• He did see the potential for trade deal with India
• The big, beautiful tax bill passed the Senate, but there is some concern that the most conservative Freedom Party members of the house were not pleased with the Senate spending amendments.That may put into jeopardy a July 4th signing by the President (Friday).