Collinson FX: June 27: US equity markets continued to rally as confidence builds.
by Collinson FX 27 Jun 20:35 UTC
25 June 2025
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Collinson FX: June 27: Confidence builds in US
US equity markets continued to rally as confidence builds. The US Dollar has been tumbling, as the need for a safe haven dissipates, while trade wars come back into focus.
The US Dollar has been shunned over the medium term, mainly due to the tariff wars, but also the realisation that it may not be the only option for reserve currency. US GDP was negative for the quarter, but beat expectations annually, rising by 3.8%. The last quarter was an aberration due to the massive flow of imports to avoid Liberation Day tariffs. The Dollar has been smashed, with the EUR surging to 1.1750, while the GBP reached 1.3750.
The precipitous falls in the reserve were not proportionately reflected in commodity currency gains, as trade concerns are manifest. The AUD pushed up towards 0.6550, while the NZD consolidates above 0.6000. As the Geo-Political crises subsides, the focus will again turn to global trade and Australasia nations remain unloved by the Trump administration.
Markets will look at inflation data from the US, France and Japan today.
Collinson FX: June 26: Ceasefire enthusiasm slides
Market enthusiasm for the Middle East ceasefire began to slide and attention turned to the Federal Reserve Chairman, appearing before Congress for the second day. Powell reiterated his apprehension about cutting rates, despite inflation tumbling, using the tariff policy as an excuse.
Powell was criticised for his tardiness and castigated for the costs on the US economy. He was reminded that the POTUS appointed him, was unhappy with his performance and will replace him.
Oil started to find an equilibrium, following the recent week of upheaval and the US Dollar continued to fade. The EUR hit 1.1650, while the GBP looks to regain 1.3650.Commodity currencies remain conflicted, with the reserve weakness, allowing some improvement.
The lack of a trade agreement from either country, with the USA, remains a big problem. The NZD attempts to hold 0.6000, while the AUD clings to 0.6500, following very soft inflation data. The Australian CPI came in at 2.1%, down from 2.4%, which will all but ensure a rate cut coming up from the RBA.
Collinson FX: June 25: Markets react postively to cease fire
President Trump announced a ceasefire, between Israel and Iran overnight, setting markets alight.
Equities across the globe surged higher, while oil prices and the US Dollar, tumbled. Reports of a break in the ceasefire have been flying, but it appears a ceasefire has been reached, with a view to peace negotiations.
Market sentiment sharply improved, despite the dampener, that has become known as ‘too slow Powell’. Federal Reserve Chairman Powell appeared before Congress, maintaining the line that he will keep his powder dry, until Trumps tariff strategy plays out.
Inflation is benign and Powell is looking like a political animal, that may be, on the endangered list. The safety of the US Dollar was no longer sought, with the EUR breaking back above 1.1600, while the GBP powered through 1.3600.
The unwanted reserve allowed the commodity currencies to recover some lost ground, with the AUD looking to regain 0.6500, while the NZD broke back above 0.6000. Markets will focus on the Fed Chairs Congressional appearance (over two days), unless war breaks out, once again in the Middle East.
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