Nasdaq posts another record close, dollar dumps again
Updated Updated Wed, 2025 June 25 10:07
* Trump claims US and Iran will hold meeting next week
* NATO allies agree to boost defence spending to 5%
* Megacap tech names boost Nasdaq, Nvidia hits record high
* EUR and GBP both make fresh cycle highs versus the dollar
FX: USD saw a third straight day of losses closing very close to its cycle low and long-term bottom at 97.60. Traders moved on from Middle East tensions to tariffs, Trump’s bill and macro data and the Fed. Chair Powell played another even hand, with a hint of dovishness in his testimonies this week. The latter has come from stating that lower than expected inflation or a weaker labour market could see rate cuts sooner.
EUR broke to fresh highs pushing above Tuesday’s multi-year highs. The shift in central bank policy between the Fed and ECB has seen rate differentials narrow and support the euro. Markets may now focus on upcoming trade talks with the early July deadline fast approaching. The EU is not on the latest potential deals which are rumoured to be getting announced on July 4. Lower crude prices also helped the euro.
GBP also traded in a narrow range initially, consolidating its strong two-day move before advancing to more cycle highs. Interest rate differentials have also narrowed recently, in favour of the UK due to the outlook for relative central bank policy. Cable remains in a strong bull channel with a long-term series of higher highs and higher lows.
USD/JPY turned higher as the yen underperformed. The BoJ’s June policy meeting summary highlighted a division among policymakers, with board member Tamura advocating for decisive interest rate hikes to address rising inflation risks, contrasting with Governor Ueda’s call for a pause due to ongoing US trade uncertainties. This hawkish stance highlights the board’s split between managing inflationary pressures and assessing the economic impact of US tariffs. That said, Tamura did say the BoJ would be unlikely to raise rates while trade talks were underway.
AUD rose versus the dollar for a third day in a row, even though CPI came in softer than expected. Headline inflation rose just 2.1% y/y, and below consensus of 2.3% moving close to the bottom of the RBA’s 2-3% target. That reinforced expectations of a rate cut next month. CAD printed a very narrow range with the major holding above 1.37.
US stocks: The S&P 500 printed unchanged at 6,092. The Nasdaq closed up 0.21% at 22,238, a record close. The Dow Jones finished lower at 42,982, losing 0.25%. Real Estate was the big loser, off 2.46%, with only three sectors in the green. They were Healthcare, Communication Services, and Tech. Tesla reported EU sales that fell 40.5% y/y. Nvidia rose 4.3%to a record high, the top gainer on the Dow, and among the best on the S&P 500. For a change, Middle East updates cooled as the Israel/Iran ceasefire is seemingly holding, at least for now, although there have been some flare-ups between Iran-backed Houthis in Yemen and Israel. Fed Chair Powell gave his second day of testimony, this time to the Senate, and largely echoed his comments from the day before.
Asian stocks: Futures are mixed. Asian markets traded firmer again as stocks followed Wall Street higher. The ASX 200 was choppy until the soft inflation data gave stocks a modest lift. The Nikkei 225 printed a relatively narrow range with hawkish BoJ commentary on the wires, while hopes grew of a US-Japan trade deal soon. The Hang Seng and Shanghai Comp made fresh highs on buoyant tech and autos, and after remarks from China’s Premier Li said judging from key indicators, China’s economy showed a steady improvement in Q2, and he is confident in its ability to maintain relatively rapid growth.
Gold steadied after a sharp sell-off on easing geopolitical concerns around the Middle East. Support has been found at the 50-day SMA at $3,322. See below for more.
Chart of the Day – Gold quiet amid competing drivers
Gold has been relatively quiet in recent days amid all the geopolitical noise. Prices fell on Tuesday by more than 1% to $3,324 as both Israel and Iran reportedly upheld the ceasefire agreement after some earlier confusion and the intervention of the US President. Silver also performed weakly as broader economic sentiment improved. Additional pressure on gold prices also stemmed from expectations that Fed Chair Powell may not be in a hurry to implement more rate cuts. Some economists believe this as inflation continues to exceed long-term targets and the Fed is in wait-and-see mode as it watches the unfolding impact of tariffs. Prices found support at the 50-day SMA at $3,322. Below here is the minor Fib level (23.6%) of this year’s rally at $3,283. The June top is at $3,452 ahead of the record high at $3,500.
