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US Treasury Secretary Bessent is speaking on Bloomberg TV and says:

• Confident that fiscal policy bill will progress in coming hours.
• This is a start of controlling US debt.
• Republican budget bill will help grow the economy while controlling and bringing down expenses.
• Questions why the US would borrow longer term at these rates?
• He is focusing on the 10 year.
• The whole curve could parallel shift down
• We could see a lowering of rates. Inflation is very low.
• Will be working on Fed Chair successor over the next week’s and months
• Asked about speculation over Fed chair, says I will do whatever the president wants but I have a stop in Washington
• We have give consideration to the January Fed Board nominee. Could eventually become the Fed Chair
• Fed made gigantic mistake in 2022 rates
• We have seen no inflation from tariffs, there could be one time price adjustment.
• There will be a flurry of trade deals going into the July 9 expiration of tariff relief, and pressure increases.
• Countries should be aware that we could spring back to April 2 levels on tariffs.
• Any tariff negotiation extensions will be up to Trump
• Any action on Fannie Mae Freddie Mac will be focused on making sure mortgage rate do not move higher

If rates are too high, why does the Treasury issue 10 year notes?.

Meanwhile on trade, Eu Commissioner Sefcovic says that will fly to Washington on Tuesday for trade talks after high level meeting in Turkey.

This article was written by Greg Michalowski at www.forexlive.com.

• There is no reason for self-complacency in Europe.
• We must be vigilant now to both directions.
• We have to closely monitor geopolitical developments and price developments in energy markets.
• The trade war seems to dampen inflation in the Euro Area rather than increase it.

The ECB has now reached the mid-point of their neutral interest rates band (1.75%-2.25%). There is a will to cut one last time and get to the lower band but they are now taking a pause at least until September to see how the data evolves throughout the summer.

The market is fully pricing in a 25 bps cut for December.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

The Nikkei is reporting that Japan PM Ishiba is considering US president Trump’s suggestion that Japan by US oil. He says “it’s a possibility that requires further more detailed consideration”.

The price of crude oil is trading down $0.17 at $65.35 to start the US session. The price has been consolidating between $63.97 and $67 since June 24. The current price is trading just above its 100-hour moving average of $65.31 (but trading above and below that moving average today as traders decide the next move).

This article was written by Greg Michalowski at www.forexlive.com.

Headlines:

• Dollar not up to too much so far on the day
• What are the interest rates expectations for the major central banks?
• ECB’s de Guindos: Facing brutal uncertainty
• Germany June preliminary CPI +2.0% vs +2.2% y/y expected
• Italy June preliminary CPI +1.7% vs +1.7% y/y expected
• Germany May retail sales -1.6% vs +0.5% m/m expected
• Germany May import price index -0.7% vs -0.4% m/m expected
• Eurozone May M3 money supply +3.9% vs +4.0% y/y expected
• UK Q1 final GDP +0.7% vs +0.7% q/q prelim
• UK May mortgage approvals 63.03k vs 59.75k expected
• Switzerland June KOF leading indicator index 96.1 vs 99.3 expected
• Trump: One great big beautiful bill is moving along nicely!
• South Korea says will seek extension on trade talks with the US
• Japan’s trade negotiator Akazawa says still working with US to reach an agreement
• UK-US trade deal has officially come into force, says UK government

Markets:

• JPY leads, GBP lags on the day
• European equities higher; S&P 500 futures up 0.4%
• US 10-year yields down 3.2 bps to 4.249%
• Gold up 0.3% to $3,281.33
• WTI crude up 0.4% to $65.32
• Bitcoin down 0.6% to $107,734

It was a quiet session with markets looking to ride out month-end before really committing to anything to start the new week.

That said, with Canada trade talks now back on the cards we are seeing risk sentiment perk up again with equities on the move. That’s about the only notable thing as investors keep up with the TACO trade.

In FX, it was all quiet with the dollar not doing too much. The yen and franc are up slightly but nothing too significant. USD/JPY is down 0.2% to 144.30 but that is off the lows of 143.77 earlier in the session. The bounce comes after the pair met last week’s low. Meanwhile, USD/CHF is pinned down by 0.2% as well at 0.7975 with sellers keeping price action below 0.8000 on the day.

Besides that, there wasn’t much else of note with other major currencies keeping little changed and more tepid against one another.

In terms of data, German inflation was a little softer than expected in June but nothing that will get the ECB off their seats heading into the summer.

In the equities space, US futures are seen up while European indices are hoping to recover back some poise following a struggle during the month of June. As for commodities, gold is a little higher but nothing that stands out too much with price keeping under $3,300 after last week’s drop.

With month-end in focus, traders will be looking to get that out of the way before reassessing their focus. However, we do have the US jobs report coming early this week and that might be reason enough for market players to wait on the data before really dipping their toes into the thick of things in July.

This article was written by Justin Low at www.forexlive.com.

• Prior +2.1%
• HICP +2.0% vs +2.2% y/y expected
• Prior +2.1%

This was very much expected after the state readings were softer than estimated earlier here. Core annual inflation is seen moderating a little, down to 2.7% from 2.8% in May. However, it hasn’t changed all too much since the start of the year. So, sticky sticky.

This article was written by Justin Low at www.forexlive.com.

Rate cuts by year-end

• Fed: 66 bps (79% probability of no change at the upcoming meeting)
• ECB: 25 bps (87% probability of no change at the upcoming meeting)
• BoE: 53 bps (73% probability of rate cut at the upcoming meeting)
• BoC: 33 bps (62% probability of no change at the upcoming meeting)
• RBA: 80 bps (91% probability of rate cut at the upcoming meeting)
• RBNZ: 32 bps (78% probability of no change at the upcoming meeting)
• SNB: 12 bps (78% probability of no change at the upcoming meeting)

Rate hikes by year-end

• BoJ: 15 bps (97% probability of no change at the upcoming meeting)

The most notable change is of course on the Fed. The catalyst was dovish comments from Fed’s Bowman last Monday where she even suggested a rate cut in July if inflation were to be muted. She’s been a hawk until then, so the market took those comments as a signal.

There wasn’t even any strong pushback from Fed Chair Powell as he acknowledged that anything can happen and they remain data dependent.

We have the US ISM PMIs, the US NFP and the US CPI before the July FOMC meeting and those reports will influence interest rates expectations.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior +1.6%
• HICP +1.7% vs +1.8% y/y expected
• Prior +1.7%

Slight delay in the release by the source. Headline annual inflation continues to hold just under 2% in Italy and this is one spot the ECB can take comfort with. That said, core annual inflation is estimated to accelerate back a little from 1.9% in May to 2.1% in June. Something to keep an eye out for at least.

This article was written by Justin Low at www.forexlive.com.

The dollar is keeping little changed for the most part, only notably seen down against the yen so far today. EUR/USD is flat at 1.1723 with GBP/USD down just 0.1% to 1.3695 while AUD/USD is also marginally higher at 0.6535 currently. It is only USD/JPY that saw a bit of a dip earlier to 143.77 before recovering back to 144.11 currently – down 0.4% on the day.

There is some minor support from last week’s lows with upside also more limited closer to the 100-hour moving average (red line) at 144.72 for the time being.

Circling back to other dollar pairs, EUR/USD is caught between large option expiries as buyers continue to try and hold their conviction in the push above 1.1700. Meanwhile, AUD/USD is still looking to shake off the key resistance region around 0.6537-50 for the most part.

As much as the dollar looks weak again amid Trump’s policy incoherence and loss of status confidence (resuming back the previous trend), we have to ride out the month-end fix and any related flows before reaffirming the trend here.

So, we’ll have to see how the flows later impact the technicals and then use that as the canvas in painting the picture to start July trading. And it won’t be long before we get a dose of data volatility to add to the mix too, with the US jobs report coming up on Thursday.

This article was written by Justin Low at www.forexlive.com.

• Facing brutal uncertainty.
• Q2, Q3 growth will be almost flat.
• Consumption as a driver hasn’t happened.
• Current interest rate position is correct.

Central bankers have been lamenting about high uncertainty since Trump started with his tariffs. The Fed has been the only central bank taking a more cautious approach and not adjusting monetary policy, while others like the ECB delivered rate cuts because of growth fears.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior 60.46k; revised to 60.66k
• Net consumer credit £0.9 billion
• Prior £1.6 billion; revised to £1.9 billion

Net borrowing of mortgage debt by individuals went up by £2.8 billion to £2.1 billion in May, following a large decrease in net borrowing of £13.8 billion to -£0.8 billion in the month before. Meanwhile, net mortgage approvals also increased slightly in May with approvals for remortgaging increasing by 6,200 to 41,500 – the largest increase since February 2024.

This article was written by Justin Low at www.forexlive.com.

• Domestic sight deposits CHF 425.8 bn vs CHF 430.0 bn prior

This article was written by Justin Low at www.forexlive.com.

• Prior +3.9%
• Loans to households Y/Y +2.0% vs +1.9% prior
• Loans to companies Y/Y +2.5% vs +2.6% prior

This is not a market moving release. The money supply growth is expected given the ECB easing.

This article was written by Giuseppe Dellamotta at www.forexlive.com.