Forex News

Nomura strategists note Euro area business activity stayed in contraction in June, with the composite PMI at 49.5 despite a small rise. Price indices fell but remain well above 50, especially in manufacturing, leaving upward price pressures elevated compared with February and before the Iran war shock.

Euro area PMIs show contraction and price risks

"Euro area and UK business activity remained in contraction (below 50) according to the June PMI surveys, though the composite PMI output index rose in France and for the euro area as a whole."

"The euro area composite PMI output index rose 1.0pt to 49.5, above our and consensus expectations, and driven by the service sector, as the manufacturing output index was broadly unchanged."

"The price indices of the European June PMIs fell across every country and sector of the data published today, but all still point to rising prices (i.e. they are above 50)."

"The euro area composite input price index fell 5.2pts to 64.7 (but is still up 5.7pts compared with February) and the euro area composite output price index fell 1.7pts to 55.4 (but is 2.3pts higher than in February)."

"Upward price pressures remain clearest in the manufacturing sector, where both input and output price PMIs are very elevated compared with February."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Scotiabank strategists Shaun Osborne and Eric Theoret note the British Pound (GBP) is softer versus the US Dollar (USD) after mildly disappointing Purchasing Managers' Index (PMI) and CBI data, with market reaction muted. Political focus turns to Andy Burnham’s upcoming economic speech and the choice of Chancellor, as investors remain wary of UK fiscal risks. Technically, GBP/USD holds above recent lows, with support near 1.31 and an expected 1.3180–1.3280 range.

Sterling pressured by data and politics

"The pound is soft, down 0.3% vs. the USD and a mid-performer among the G10 currencies with movement generally following broader themes and developments."

"The latest preliminary PMI’s delivered marginal disappointment across both manufacturing (modest expansion printing 53.1) and services (sub-50 contraction at 48.7). CBI business sentiment also disappointed, however the overall reaction to both releases appears relatively muted."

"In politics, the favored future Labour Party leader (and presumed future PM) Andy Burnham is said to be preparing to deliver a speech next week, in which he will outline his economic plan. Fiscal risk remains a core concern for markets as participants look specifically to the choice of Chancellor."

"Burnham is a left-leaning candidate and markets may struggle to remain confident in the UK’s fiscal outlook without a clear re-commitment to the self-imposed fiscal rules championed by current Chancellor Reeves."

"Bearish – the pound is holding above both Friday’s lows as well as the late March lows, offering some near-term reassurance relative to the EUR. Both lows were observed in the mid-1.31s, offering little in terms of distance from current spot."

"The daily chart reveals additional support at the early November low just above 1.30. Momentum is bearish but off its recent oversold low. We look to a near-term range bound between 1.3180 and 1.3280."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Commerzbank’s Carsten Fritsch notes that Brent has dropped back below USD 80, briefly touching USD 76.5, after the US allowed Iran to export oil and oil products until at least August 21. Despite some normalization in ship traffic through the Strait of Hormuz, volumes remain far below pre-blockade levels, leading Commerzbank to judge that further downside in oil prices is limited.

Sanctions relief but flows constrained

"Oil prices fell sharply at the start of the week. Brent slipped back below the USD 80 per barrel mark and continues to fall today to USD 76.5, its lowest level since early March."

"Iran has received permission from the US to export oil and oil products, as the US Treasury Department announced yesterday. The sanctions exemptions are initially valid through August 21."

"This figure is still significantly lower than before the blockade, when more than 100 ships, including about 30 oil tankers, crossed the strait every day. Thus, ship traffic has by no means returned to normal."

"We therefore view the further downside potential for oil prices as limited."

"This would keep the LNG supply tight for even longer, which, combined with higher demand in the summer, could lead to rising gas prices."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

TD Securities’ commodity team notes that Copper is seeing large CTA (Commodity Trading Advisors) selling as markets look past Strait of Hormuz supply risks and focus more on macro and demand-side weakness. They highlight that upcoming US tariff decisions could temporarily support Copper prices, but soft Chinese physical premiums and rising commercial inventories point to a deteriorating demand profile.

Tariff decision offsets weakening demand

"Base metal unwind. CTAs are large-scale sellers of copper, zinc and nickel on the day, while aluminum remains skewed to additional marginal selling."

"As the market begins to look past supply risks tied to the Strait of Hormuz, base metals are increasingly prone to any signs of macro/demand-side weakness."

"For copper, next week's tariff decision uncertainty is likely to keep prices supported, however easing physical premiums in China continue to point toward a weaker demand profile."

"While SHFE inventories are falling, measures of commercial inventories are starting to rise in the Middle Kingdom amid ample supply from smelters and softer demand."

"The red metal is also becoming more prone to demand-side weakness, however prices would need to fall to $13,000/t before further systematic selling kicks in."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Bank of England (BoE) policymaker Alan Taylor said on Tuesday that keeping interest rates on hold for an extended period remains the most appropriate policy response, according to the text of a speech due to be delivered at an event hosted by Barclays and the Center for Economic Policy Research.

Key takeaways:

An extended hold at this level is, to me, very much the correct and appropriately measured policy response we need.

Bank Rate is 75 bps above my estimate of neutral.

If more slack opens up like in BoE’s scenario ‘A’, we may end up having to cut quickly and could even see Bank Rate below neutral for a while.

In worst-case inflationary scenario, nothing is off table, BoE would have to do what it must to defend nominal anchor.

We enter this shock with a very weak economy.”

BoE’s Taylor leans cautiously dovish as extended hold masks rising cut risks for Pound

BoE’s Taylor scores 5.4/10 on FXS Speechtracker, notably above the 3.3/10 historic average. The emphasis that an “extended hold” is the “correct” response, even with Bank Rate 75 bps above Taylor’s estimate of neutral, frames current policy as deliberately restrictive but not yet at a pivot, which can cap immediate Pound upside.

The conditional guidance that, under scenario A, policy might need to be cut “quickly” and even move below neutral, combined with the admission that the United Kingdom enters this shock with a “very weak economy,” reinforces downside growth risks and a medium-term bias toward easing. At the same time, the warning that in a worst-case inflationary scenario “nothing is off the table” to defend the nominal anchor preserves a residual hawkish backstop, tempering but not erasing the overall dovish shift for Pound traders.

Bank of Canada (BoC) Governor Tiff Macklem said on Tuesday that global imbalances are increasing and may risk financial stability. Speaking to a business audience in Paris., Macklem noted that China’s outward flow of capital continues with the United States remaining the biggest destination for those flows.

Key takeaways:

Imbalances are growing as China’s outward flow of capital continues, and the United States has been the biggest destination of capital.

Global imbalances are growing and may also be fuelling financial stability risks.

While imbalances adjust slowly, attractiveness of US Dollar may have let imbalances persist longer.

Leveraged trading strategies of hedge funds and non-bank financial intermediaries may be making this core market more fragile.

Even as the US has pulled back from open trade, others should look to deepen trade and investment relationships.

If we want a more balanced and resilient global system, we need to create more places for savings to go beyond just the US.”

• Gold weakens as a stronger US Dollar and rising Fed rate hike bets weigh on sentiment.
• Traders price in a 70% chance of a September Fed rate hike as focus shifts to the US PCE inflation report.
• XAU/USD's technical outlook remains bearish, with price action gravitating toward lower Bollinger Band support near $4,044.

Gold (XAU/USD) trades on the back foot on Tuesday, pressured by a stronger US Dollar (USD) and rising expectations that the Federal Reserve (Fed) could raise interest rates later this year.

At the time of writing, XAU/USD is trading around $4,130 after briefly slipping below the $4,100 mark earlier in the day.

Gold bulls remain on the sidelines as prospects of higher interest rates in the US are driving demand for the US Dollar and Treasury yields, following last week's hawkish Federal Reserve meeting, where Chair Kevin Warsh reiterated the central bank's commitment to returning inflation to its 2% target.

The Fed's hawkish stance provided fresh support for the Greenback, even as easing tensions in the Middle East pushed Oil prices lower and reduced fears of a sustained inflationary shock.

The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, is hovering around 101.24, its highest level since May 2025.

The combination of a firmer US Dollar and higher Treasury yields is keeping the precious metal in a correction phase after a remarkable two-year rally fueled by geopolitical tensions, central bank buying and Fed rate cuts. XAU/USD is now down nearly 25% from the all-time high near $5,600 reached in January.

What's next for Gold?

Attention now turns to this week's US Personal Consumption Expenditures (PCE) inflation data and the final estimate of first-quarter Gross Domestic Product (GDP), which could provide fresh guidance on the Fed's policy path.

Preliminary Purchasing Managers Index (PMI) data pointed to continued resilience in the US economy in June. The S&P Global Services PMI rose to 51.3 from 50.7 in May, while the Manufacturing PMI accelerated to 55.7 from 55.1, with both readings beating expectations.

Unless the Fed's hawkish stance shifts meaningfully, higher-for-longer interest rate expectations are likely to remain a headwind for Gold, which tends to perform best in a low-interest-rate environment. The CME FedWatch Tool shows traders are pricing in a 70% chance of a rate hike at the September meeting.

According to the World Gold Council's Weekly Markets Monitor, if the US Dollar Index (DXY) sustains its rally above the 100 mark, it could signal an extension of Gold's downtrend below the $4,000 psychological level.

The council said, "Support would then be seen next at US$3,887/oz-US$3,857/oz, which includes the 38.2% retracement of the entire rise in Gold from the 2015 low where we would look for fresh signs of a potential floor here. Should weakness extend, we would see next major support at the October 2025 high at US$3,500/oz."

Traders are also closely monitoring ongoing US-Iran negotiations after both sides signed a 60-day Memorandum of Understanding (MoU) last week. Talks appear to be progressing, with Washington temporarily easing sanctions on Iranian oil exports during the negotiating period. However, major sticking points remain, including Iran's nuclear program and regional security issues involving Israel and Lebanon.

Technical Analysis:

XAU/USD retains a bearish near-term tone as it sits beneath the 20-day Bollinger Simple Moving Average around $4,318.64.

Price action is gravitating toward the lower band support near $4,043.85, while the Relative Strength Index (RSI) on the daily chart lingers in the mid-30s, hinting at persistent downside pressure rather than a decisive oversold capitulation. A rising Average Directional Index (ACX) near 38 suggests the prevailing downtrend remains relatively strong.

On the topside, initial resistance is now aligned with the 20-day Bollinger SMA at roughly $4,318.82, with the upper band near $4,593.10 offering a more distant cap should a corrective bounce develop.

On the downside, the lower Bollinger band around $4,044.54 acts as the first notable floor, ahead of the more psychological and structural horizontal support at $4,000.00, where sellers could be tempted to lock in profits and trigger a short-term pause in the decline.

(The technical analysis of this story was written with the help of an AI tool.)

The flash estimate of the United States (US) S&P Global Composite PMI came in at 52.2 in June, better than the 51.5 posted in May.

Manufacturing output improved to 55.7 in the same month from the previous 55.1, while surpassing the market's expectation of 54.8. Finally, the Services PMI printed at 51.3, above the 51 forecast and the 50.7 posted in May.

Market reaction

The US Dollar (USD) holds onto substantial intraday gains despite barely reacting to S&P Global data.

This section below was published as a preview of the S&P Global Purchasing Managers' Indices report at 09:00 GMT.

• The S&P Global flash PMIs for June are expected to show stable business expansion.
• US data may have a different impact on the US Dollar following the Federal Reserve’s shift under Chair Kevin Warsh
• EUR/USD trades near its 2026 low of 1.1411 with a firm bearish bias.

S&P Global will release the June flash Purchasing Managers' Indices (PMIs) for most major economies, with the United States (US) data scheduled on Tuesday. These surveys of top private-sector executives are seen as an early indicator of the country’s economic health.

Market participants anticipate that the S&P Global Services PMI will print at 51, up from 50.7 in May, while S&P Global Manufacturing output is expected to print at 54.7, slightly below the previous month's 55.1 reading. The Composite PMI, a combination of manufacturing and services data, stood at 51.5 in May.

S&P Global separately reports manufacturing activity and services activity through the Manufacturing PMI and the Services PMI. Additionally, they present a weighted combination of the two, the Composite PMI. Generally speaking, a reading of 50 or more indicates expansion, while readings below the threshold indicate contraction.

The preliminary or flash versions tend to have a broader impact on the US Dollar (USD).

What can we expect from the next S&P Global PMI report?

The impact this time could be larger than usual. Last week, the Federal Reserve (Fed) had a monetary policy meeting, and the announcement was not about interest rates, but about a shift in how the Fed decides and communicates. Sure, the dot plot in the Summary of Economic Projections (SEP) showed that policymakers now anticipate a rate hike this year, vs. the previous SEP, which anticipated a cut.

But market participants got far more nervous about Chair Kevin Warsh drastically reducing forward guidance. Not only was the Federal Open Market Committee (FOMC) statement halved, but Warsh also refrained from including his “views” in the dot plot. Warsh aims to completely shift the focus from guidance to rough data.

S&P Global PMIs may not be a game-changing data release and may have a limited impact on the FOMC’s decision. But market participants may well start weighing in data in the absence of forward guidance.

Additionally, the US Dollar (USD) heads into the release with uncertainty-related strength. The USD holds onto post-Fed gains and extends its advance amid caution over Middle East developments. Optimism reigned last week after the United States (US) and Iran signed a deal to extend the truce and go into deeper negotiations. The deal included the reopening of the Strait of Hormuz, something markets welcomed strongly. Weekend news, however, hit such markets’ confidence as Iranian authorities announced they would close the critical sea passage again. Negotiations continue, as well as navigation through the Strait, but optimism faded.

The Greenback is also firmer amid mounting speculation the Fed will deliver an interest rate hike before year-end. Despite Warsh's disbelief in forward guidance, his words leaned hawkish, while half of the FOMC voting members added a dot on rate hikes.

Back to PMIs, the figures are expected to confirm economic expansion continues in the US, with modest ticks in any direction having little relevance, as long as the figures remain within expansion territory. For sure, better-than-anticipated figures would boost the Greenback, while weaker-than-anticipated figures could trigger a near-term USD slide.

It’s also worth noting that the PMIs include inflation and employment sub-components that could reinforce or deny the market’s belief of upcoming interest rate moves. Inflationary pressures have been on the rise, which means that an uptick in the inflation-related index could add to rate hike speculation and push the USD even higher.

When will the June flash US S&P Global PMIs be released, and how could they affect EUR/USD?

The S&P Global Manufacturing, Services, and Composite PMIs reports will be released at 13:45 GMT on Tuesday, and as previously noted, are expected to show that US business activity continued to expand in June.

Valeria Bednarik, FXStreet Chief Analyst, notes: “The EUR/USD pair trades a handful of pips above the 2026 low of 1.1411 posted in March, and despite looking oversold in the near-term, the bearish momentum is strong enough to support lower lows ahead. From a technical perspective, the daily chart shows that technical indicators rotated south after a modest uptick within negative territory, while the pair extends its slide below all its moving averages. The 20-day Simple Moving Average (SMA) heads firmly lower at around 1.1560 and below the longer ones, usually an indication of sellers’ control.”

Bednarik adds: “A break below the aforementioned 2026 low exposes the 1.1360 price zone ahead of the 1.1300 threshold. Should the pair bounce, the first line of sellers aligns around 1.1470, a strong static resistance area, ahead of 1.1550.”

Scotiabank strategists Shaun Osborne and Eric Theoret note the Canadian Dollar (CAD) retains a soft undertone despite a first modest gain versus the US Dollar (USD) in eight sessions, helped by firmer May Consumer Price Index (CPI) and steadier US–Canada spreads. They doubt a reversal in yield differentials is likely soon, implying CAD underperformance persists. Technically, they see an overbought USD bull trend that could still extend toward the 1.43–1.45 area if 1.41 breaks.

Overbought rally eyes 1.43–1.45

"The CAD retains a soft undertone but the it did manage to close a little higher on the USD yesterday—its first net gain in eight sessions."

"The trend in wider US/Canada spreads may be steadying, allowing a minor reprieve for the CAD, following yesterday’s higher than expected May CPI data. A reversal in yield differentials is unlikely any time soon, however, and that likely means the CAD will continue to languish—absent a broader reconsideration of the USD outlook. "

"Neutral/bullish—The USD bull trend remains strong and technically overbought, according to various technical studies. The daily RSI at 87 is higher now than in both early 2025 and 2020 when the USD surged to 1.47/1.48."

"Yesterday’s minor rebound in the CAD may signal a temporary pause in the USD bull trend but, aside from overbought signals, there is little in price action at the moment to suggest a significant CAD recovery."

"Rather, USD gains through the upper 1.41s may see the rally extend to 1.43-1.45 range."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)