The US dollar struggled to recoup its losses on Wednesday with investors heading for riskier assets following the Iran-Israel ceasefire.

Global stocks surged to record highs while oil prices plummeted as the two countries agreed to cease hostilities. 

Such developments prompted investors to heavily sell off the dollar after a recent surge on haven demand during the war.

The euro dipped 0.1% today but was still near October 2021 highs at $1.1597, while Sterling settled at $1.3616, near January 2022 highs.

The Swiss franc spiked to $0.8051 near 10-⅕ year highs, while the yen bucked the trend with a 0.37% drop against the greenback to 145.4.

As for the dollar index, it rose mildly to 98.1 against a basket of major rivals.

Powell

Fed Chair Jerome Powell testified ahead of Congress that the Federal Reserve isn’t in a hurry to cut interest rates.

Trump continued his attacks against Powell and said he hoped Congress would take “this stubborn and stupid person” into account, adding that America will pay the price of “his stupidity” for many years to come. 

Trump said there’s no inflation in the US and the economy is doing great, and asked once more for interest rates to be down by two or three percentage points, which would save the government $800 billion a year.

US Rates

Following Powell’s testimony, the odds of a Fed 0.25% rate cut in July stod at 19%.

The odds of such a cut in September rose from 82% to 87%.

Gold prices rose in European trade on Wednesday for the first time in four days away from two-week lows as the dollar fell against a basket of major rivals.

Now traders await Fed Chair Jerome Powell’s second part of his testimony ahead of Congress later today.

The Price

Gold prices rose 0.4% today to $3337 an ounce, with a session-low at $3320.

Gold lost 1.3% on Tuesday, plumbing two-week lows at $3295 after the Iran-Israel ceasefire.

US Dollar

The dollar index fell 0.15% on Wednesday, extending losses for the third straight session against a basket of major rivals.

The dollar is hurt as haven demand plunges following the Iran-Israel ceasefire, and bearish remarks by Fed officials ahead of Congress.

Powell

Fed Chair Jerome Powell testified ahead of Congress that the Federal Reserve isn’t in a hurry to cut interest rates.

Trump continued his attacks against Powell and said he hoped Congress would take “this stubborn and stupid person” into account, adding that America will pay the price of “his stupidity” for many years to come. 

Trump said there’s no inflation in the US and the economy is doing great, and asked once more for interest rates to be down by two or three percentage points, which would save the government $800 billion a year.

US Rates

Following Powell’s testimony, the odds of a Fed 0.25% rate cut in July stod at 19%.

The odds of such a cut in September rose from 82% to 87%.

SPDR

Gold holdings at the SPDR Gold Trust fell 1.72 tons yesterday to a total of 955.68 tons, away from September 2022 highs at 957.4 tons.

The euro rose in European trade on Wednesday against a basket of major rivals, extending gains for the fifth straight session against the dollar, and about to hit a four-year peak as the risk appetite rebounded as the Israel-Iran ceasefire holds. 

The odds of an ECB interest rate cut in July dropped considerably as investors await more clues on the future path of monetary policies. 

The Price

The EUR/USD price rose 0.2% to $1.1632, with a session-low at $1.1604.

The euro closed up 0.3% against the dollar on Tuesday, the fourth profit in a row, marking a four-year high at $1.1641 after the Israel-Iran ceasefire. 

US Dollar

The dollar index fell over 0.15% on Wednesday, extending losses for the third straight loss against a basket of major rivals.

As the Israel-Iran ceasefire holds, the dollar fell after bearish remarks from Fed Chair Jerome Powell boosted the odds of upcoming rate cuts.

European Rates

ECB President Christine Lagarde hinted at the possible end of the current cycle of policy easing, which was in response to a combined shock such as the Covid 19 pandemic, the Ukrainian war, and the energy crisis.

According to a Reuters source, most ECB members now aim at holding interest rates unchanged in July, with the global markets now expecting just an additional 25 basis points of rate cuts by the end of the year. 

The odds of a 0.25% ECB rate cut in July now stood below 30%, with traders awaiting more eurozone data and remarks by ECB officials to gather more clues. 

The Australian dollar rose in Asian trade on Wednesday on track for the third straight profit against the US dollar, as the risk appetite improved in the markets following the Israel-Iran ceasefire. 

Aussie’s gains are stymied by weak inflation data in Australia, boosting the odds of an RBA interest rate cut in July.

The Price

The AUD/USD price rose 0.25% today to $0.6508, with a session-low at $0.6488.

The Aussie rose 0.45% on Tuesday against the US dollar, the second profit in a row following the Israel-Iran ceasefire. 

US Dollar

The dollar index fell 0.15% on Wednesday, expanding the losses for the third straight session against a basket of major rivals.

The US dollar has been hurt by bearish remarks from Fed Chair Jerome Powell, boosting the odds of a rate cut in the second half of the year.

Australian Inflation

Australia’s consumer prices rose 2.1% y/y in May, below estimates of 2.3%, and down from 2.4% in the previous reading. 

Following the data, the markets now expect 70 basis points of interest rate cuts overall by the Reserve Bank of Australia by the end of the year.

The odds of a 0.25% rate cut in July rose from 65% to 75%.

The RBA cut interest rates twice since February to 3.85%, as inflation slowed to the 2-3T target.