US dollar skids to two-week trough after US credit rating cut
The US dollar skidded in European trade on Monday to a two-week trough against a basket of major rivals under heavy selling pressures after US credit rating downgrade.
US President Donald Trump once again called on the Federal Reserve to cut rates soon as a necessary measure to support the US economy against increasing global challenges.
The Index
The dollar index fell 0.9% today to 100.06, the lowest since May 9, with a session-high at 100.98.
On Friday, the index rose 0.2%, the second profit in three days following aggressive US inflation forecasts data.
The index rose 0.55% last week, the fourth weekly profit in a row as US recession concerns diminished after the US-China deal to pause tariffs for 90 days.
US Credit Rating
Moody’s cut US sovereign rating by one notch on Friday, becoming the last major rating agency to do such a step.
Moody’s pointed to the growing US debt burden, which reached a record $36 trillion, reflecting the structural fiscal challenges facing the world’s largest economy.
Trade Developments
US Treasury Secretary Scott Bessent stated on Sunday that President Donald Trump will reimpose the reciprocal tariffs announced last month on trade partners who don’t negotiate with a good intention.
US Rates
US President Donald Trump once again called on the Federal Reserve to cut interest rates in posts on his social media accounts.
According to the Fedwatch tool, the odds of a Fed 0.25% interest rate cut in June stood at just 8%.
The odds of a 0.25%% Fed rate cut in July stood at 37%.
Traders now expect 50 basis points overall of Fed rate cuts this year, likely starting in October.
UK and EU reach agreement to reset ties after Brexit
Sources indicated the UK and the EU finally reached an agreement on Monday to reset their ties following the raucous British exit from the union in 2020.
UK Prime Minister Keir Starmer is hosting European Commission President Ursula von der Leyen alongside other senior EU officials in a long-awaited summit in London.
An EU official said a mutual agreement on fishing water, extended to June 30, 2038, was reached, in addition to other deals on energy cooperation, security and defense partnership.
A document that Reuters was made privy to also showed the two sides agreed to work together to make it easier for young people to move, live, and work all over the continent in a step aimed at strengthening cultural ties.
Gold climbs 1.5% after US credit downgrade
Gold prices rose 1.5% in European trade on Monday, resuming its recovery from a five-week low while the dollar loses ground against major rivals.
It comes after the US credit rating downgrade, which renewed concerns about the US financial stability and raised the challenges facing US policymakers.
The Price
Gold prices rose 1.5% today to $3249 an ounce, with a session-low at $3203.
On Friday, gold shed 1.15% and approached five-week lows at $3120 an ounce.
The precious metal also lost 3.7% last week, the third weekly loss in four weeks, and the heftiest in 2025 as haven demand dropped with US-China trade tensions receding.
US Dollar
The dollar index fell 0.8% on Monday, plumbing two-week lows at 100.19 against a basket of major rivals.
A weaker dollar makes the greenback-denominated gold futures cheaper to holders of other currencies.
US Credit Rating
Moody’s cut US sovereign rating by one notch on Friday, becoming the last major rating agency to do such a step.
Moody’s pointed to the growing US debt burden, which reached a record $36 trillion, reflecting the structural fiscal challenges facing the world’s largest economy.
Trade Developments
US Treasury Secretary Scott Bessent stated on Sunday that President Donald Trump will reimpose the reciprocal tariffs announced last month on trade partners who don’t negotiate with a good intention.
US Rates
US President Donald Trump once again called on the Federal Reserve to cut interest rates in posts on his social media accounts.
According to the Fedwatch tool, the odds of a Fed 0.25% interest rate cut in June stood at just 8%.
The odds of a 0.25%% Fed rate cut in July stood at 37%.
Traders now expect 50 basis points overall of Fed rate cuts this year, likely starting in October.
SPDR
Gold holdings at the SPDR Gold Trust fell 8.89 tons on Friday to a total of 918.73 tons, the lowest since March 20.
Euro rebounds on concerns about US economic stability
The euro rose in European trade on Monday against a basket of major rivals, heading for the second profit in three days against the US dollar amid concerns about the US financial stability following a credit downgrade.
Also recent European inflation data led to divisions on the odds of an ECB interest rate cut in June as traders now await more data to gather concrete clues.
The Price
The EUR/USD price rose 0.35% today to $1.1199, with a session-low at $1.1170.
The euro closed down 0.2% on Friday against the dollar on profit-taking away from a week high at $1.1266 following strong US inflation data.
The euro lost 0.75% last week, marking the fourth weekly loss in a row as global trade tensions cooled.
US Credit Rating
Moody’s cut US sovereign rating by one notch on Friday, becoming the last major rating agency to do such a step.
Moody’s pointed to the growing US debt burden, which reached a record $36 trillion, reflecting the structural fiscal challenges facing the world’s largest economy.
European Rates
Recent eurozone inflation data showed prices rose past estimates in April, renewing pressure on the European Central Bank’s policymakers.
Following the data, the odds of an ECB 0.25% rate cut in June fell from 60% to below 50%.