The United States Redbook Index (YoY) rose to 5.9% on July 4, up from 4.9%. This index tracks retail sales, and its increase indicates growing consumer spending during that time. The AUD/USD pair bounced back above 0.6550 after three days of declines. This rebound followed the Reserve Bank of Australia’s decision to maintain its current policy, easing trade-related concerns.

Euro Dollar Reversal

The EUR/USD pair reversed its drop to two-week lows around 1.1680 as demand for the US Dollar weakened. Market focus is now on the upcoming release of the FOMC Minutes, which could influence market trends. Gold has returned to the $3,300 level, recovering from earlier lows due to weaker performance in the US Dollar. However, strong US yields are limiting further gains for gold. The Reserve Bank of New Zealand is expected to keep the interest rate at 3.25% after six cuts. The easing cycle is nearing an end as inflation has returned to target levels, affecting the New Zealand Dollar’s movements. New US tariffs are impacting Asia, and countries like Singapore, India, and the Philippines might find advantages. While tariffs increased for Asian economies overall, some nations could benefit from tariff concessions.

US Tariffs Impact on Asia

The recent rise in the US Redbook Index to 5.9% from 4.9% shows a stronger retail activity than expected. This suggests more disposable income is flowing into the economy, likely increasing demand in various sectors. If this trend continues, macro traders may expect higher inflation readings soon, which could affect short-term rate expectations. The AUD/USD’s rise above 0.6550 came right after the Reserve Bank of Australia announced its decision to maintain its policy stance with a focus on inflation. Despite three days of losses, this rebound suggests ongoing confidence in the RBA’s resilience. This might indicate a temporary support level without needing to reevaluate long-term fundamentals just yet. After a brief drop to around 1.1680, the EUR/USD saw a reversal as demand for the US Dollar eased. Although the change wasn’t drastic, it helped restore balance after the strength of the US Dollar. With the Federal Reserve set to release its latest meeting minutes, any new information about their strategy—whether confirming current rates or indicating potential changes—could provide momentum for short-term EUR/USD trades. Currently, the Euro appears stable, and there’s little reason to pursue it unless the minutes contain unexpected insights. Gold’s return to around $3,300 seems like a recovery, but high US yields continue to act as a ceiling. Strong Treasury returns make it challenging for non-yielding assets to maintain higher values. As long as these yield pressures persist, we consider gold’s increase a technical bounce rather than a shift in underlying market beliefs. Any trading decisions should keep this resistance in mind, especially if speculation about rate cuts remains low or requires adjustments. In New Zealand, the anticipated decision by the RBNZ to hold rates at 3.25% marks a pause after six consecutive cuts. With inflation now back within the target range, the central bank seems content. Consequently, the NZD has stabilized, reflecting market adjustments to the absence of immediate easing. It’s unlikely that this rate will change significantly in the coming weeks unless global factors shift, meaning any short-term strength in the New Zealand Dollar should be approached with caution. Lastly, the new US tariffs are causing varied impacts across Asia. While overall cost increases and retaliatory actions may harm broader exports, countries like Singapore, India, and the Philippines might gain from redirected trade due to their bilateral agreements. These changes add complexity to risk management when considering exposure to Asian currencies or regional indices. However, any advantages aren’t guaranteed and depend heavily on government actions and structural benefits, which could take time to develop. In the near term, the landscape is shaped by careful central bank messaging, mixed signals on inflation, and rapidly changing trade policies. Therefore, it’s wise to base trading decisions on clearly defined levels rather than general market themes. Any overnight adjustments or global developments could quickly shift what currently appears stable. Create your live VT Markets account and start trading now.

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