With the uncertainty of the current geopolitical landscape, the US dollar is primarily stabilising, exhibiting a weaker tendency against the G10 currencies. Outside of the New Zealand dollar, which continues to benefit from yesterday’s rate hike, and the Canadian dollar, exhibiting slight weakness, the remaining G10 currencies are experiencing gains of less than 0.15% as the North American session approaches. August WTI and September Brent are currently fluctuating within the ranges established yesterday. The FOMC minutes released yesterday did not provide the market with any new insights or information that had not already been anticipated. Federal Reserve officials exhibit a divergence of opinions, as previously indicated in the “dot plot,” where nine out of 18 members expressed the view that at least one interest rate hike this year would be suitable. The UK’s Labour leadership contest formally commences today, although there appears to be scant uncertainty regarding the eventual result. French politics are currently experiencing significant changes following Le Pen’s announcement of her candidature for the presidency in the upcoming year. Lastly, undeterred by a modest deceleration in consumer inflation, the PBOC established the dollar’s reference rate at a new three-year low.

The euro experienced a decline, reaching a four-day low in North America yesterday at approximately $1.1390. However, it rebounded in the North American afternoon, achieving new session highs just above $1.1430. It has risen to almost $1.1450 today but continues to consolidate within the range established last Thursday, coinciding with the release of the US employment report. That range was approximately 1.1375 to 1.1475. The 20-day moving average stands at approximately 1.1445, with the single currency failing to establish a position above this threshold since the day preceding the June 17 FOMC outcome. The yen is consolidating near the 40-year low established last week. The US dollar approached JPY162.85 on July 1 before retreating following the release of employment data. With a vigorous momentum, the greenback approached nearly JPY162.70 yesterday. It is currently trading predominantly beneath JPY162.60. Options valued at nearly $2 billion at JPY163 are set to expire today. The US 10-year premium over JGBs has contracted to a new low not seen since March 2022, approximately 162 basis points on Monday, and has shown signs of stabilisation in recent days. It was nearly 200 basis points as recently as late March.

Sterling exhibited robust demand yesterday, achieving new session highs in the early New York afternoon at approximately $1.3410, before ultimately closing just below $1.3390. Quietly, sterling has appreciated in nine of the past ten sessions. It reached $1.3430 today, marking its highest level since June 17, when the Federal Reserve adopted a hawkish stance. It has surpassed the 200-day moving average at $1.3400. It has not closed above this level since June 16. Nearby resistance is observed in the $1.3440-60 range. Sterling is also outperforming the euro; there may be scope toward GBP0.84 initially (~1.5%). Sterling has exhibited minimal engagement with Labour’s leadership contest that officially commences today. For the first time in several months, the Canadian dollar is exhibiting signs of vitality. From early May through late June, it experienced a decline of approximately 5.2% relative to the US dollar. The greenback approached CAD1.4250, a level it attempted to breach on two occasions but was met with resistance. It recorded its lowest closing value in almost two and a half weeks yesterday.

The CAD1.4150 area, which was approached yesterday, is currently maintaining its position. It is approaching the 20-day moving average (~CAD1.4155 today). The US dollar has maintained its position above this level since May 7. Below there, the CAD1.4100-10 area may represent the next level of chart support. The Australian dollar declined to a four-day low yesterday, slightly exceeding $0.6905. It recovered and reached almost 0.6940 in the North American afternoon. It has experienced a slight increase today. Initial resistance is observed around this week’s high (~$0.6960), with the 20-day moving average positioned slightly lower by a few hundredths of a cent. It has not maintained a position above it since the conclusion of May. The 0.7000 may offer the next important target.