The upcoming week will be dominated by the European Central Bank’s (ECB) interest rate decision, United Kingdom (UK) inflation and labor market figures, and preliminary global Purchasing Managers Index (PMI) data.
Gold edges higher by some 0.92% on Friday as the US-Iran conflict boosted energy prices, which ultimately drive inflation higher, increasing expectations that the Federal Reserve (Fed) might need to raise interest rates.
The Dow Jones Industrial Average (DJIA) trades near 52,250 on Friday, down nearly 300 points late in the month's strangest session.
USD/CHF trades with a downside bias on Friday as the Swiss Franc (CHF) outperforms its major peers, while the US Dollar (USD) is little changed. At the time of writing, the pair trades around 0.8074 after reaching 0.8149 earlier this week, its highest level since August 2025.
The US Dollar Index (DXY) trades nearly unchanged around 100.70 on Friday after surrendering part of its initial advance.
EUR/USD trades flat on Friday as traders reassess the inflationary impact of surging Oil prices amid escalating tensions in the Middle East, which have disrupted energy supplies through the Strait of Hormuz.
The Pound Sterling retreats during the North American session, down 0.22% against the Greenback, as geopolitical tensions remained high, triggering a jump in Oil prices and heightening fears of a reacceleration of inflation. The GBP/USD trades at 1.3449 after peaking near 1.3480.
West Texas Intermediate (WTI) trades around $81.10 at the time of writing on Friday, up 2.76% on the day, and is heading for a weekly gain of more than 13% as geopolitical tensions in the Middle East continue to escalate.
AUD/USD trades higher near 0.6980 on Friday, recovering from an initial decline as the US Dollar (USD) loses ground following a mixed batch of United States (US) economic data.
Scotiabank’s Shaun Osborne and Eric Theoret notes GBP/USD is lower on the day and well off its one-year high reached on optimism that incoming PM Burnham will pursue market-friendly policies. Despite late-week slippage, that view remains.
USD/JPY trades flat on Friday, holding near four-decade highs as the Japanese Yen struggles to attract buyers amid persistent headwinds, including higher Oil prices, Japan’s wide interest-rate gap with other major economies and a resilient US Dollar (USD).
Royal Bank of Canada (RBC) economists Nathan Janzen and Abbey Xu expect Canada’s June Consumer Price Index to show headline inflation easing to 2.8% year-over-year from 3.2% in May, mainly on lower energy prices.
Scotiabank’s Shaun Osborne and Eric Theoret note the US Dollar (USD) is broadly firmer as risk aversion dominates, with equities weaker and Oil higher.
USD/CHF trades around 0.8070 at the time of writing on Friday, down 0.22% on the day. The pair remains under pressure as safe-haven demand for the Swiss Franc (CHF) offsets modest support for the US Dollar (USD) following stronger-than-expected US consumer sentiment data.
Commerzbank’s commodity team highlights renewed geopolitical risks for Oil as Iran again threatens to block the Strait of Bab al-Mandab, a key route for Saudi exports rerouted from the Strait of Hormuz.
Wells Fargo Economics has raised its global Gross Domestic Product (GDP) forecast to 2.7% for 2026 and trimmed global Consumer Price Index (CPI) to 4.3%, reflecting a slightly lower Oil price path.
Federal Reserve (Fed) Bank of Cleveland President Beth Hammack said in a LinkedIn post on Friday that inflation pressure remains broad-based, with businesses calling for policy action and consumers expressing a growing sense of despair as they struggle to cover their expenses.
Scotiabank’s Shaun Osborne and Eric Theoret report EUR/USD trading slightly lower in quiet conditions as markets look ahead to next week’s ECB meeting, with policymakers in a blackout period and implied volatility subdued. They and consensus expect no policy change.
Gold (XAU/USD) holds firm on Friday but lacks bullish momentum as rising Oil prices revive inflation concerns and reinforce expectations that the Federal Reserve (Fed) could raise interest rates later this year.
TD Securities’ Robert Both expects Canadian headline CPI to ease to 2.9% year-on-year in June, with a 0.2% monthly decline driven by sharply lower Energy prices.
Thu Lan Nguyen at Commerzbank notes that weaker United States (US inflation data briefly supported Gold, but the price has slipped back below USD 4,000 per troy ounce.
EUR/GBP edges higher on Friday, extending gains for a second consecutive day as traders cover short positions following the midweek sell-off. At the time of writing, the cross trades around 0.8501 but is still on track for a fourth straight weekly loss.
Scotiabank’s Shaun Osborne and Eric Theoret highlight the Canadian Dollar (CAD) as a modest outperformer, with firmer Oil offsetting weak equities and narrowing front-end spreads driving gains. Position adjustment after heavy CAD short-building is adding tailwinds.
American consumer confidence regained momentum in early July, as households grew more optimistic about current conditions and the broader economic outlook, according to preliminary data from the University of Michigan.
ING strategists Francesco Pesole and Frantisek Taborsky note that DXY-weighted short-term implied volatility has dropped to 2021 levels, despite geopolitical tensions and Federal Reserve risks. Pesole argues that AI-driven equity resilience is anchoring currencies and supporting carry trades.
Rabobank’s Global Daily, titled “To govern is to choose”, discusses the UK’s political and macroeconomic backdrop as Labour’s Andy Burnham is set to become prime minister.
TD Securities strategists expect the European Central Bank (ECB) to keep the deposit rate at 2.25% in July after June’s hike, with September remaining a live meeting.
USD/CAD trades under pressure on Friday as the Canadian Dollar (CAD) benefits from higher Oil prices, offsetting the US Dollar’s (USD) recovery. At the time of writing, the pair trades around 1.4022, near a one-month low.
UK Labour leader Andy Burnham said on Friday that he intends to lead a pro-business Labour Party, arguing that his experience working with businesses as Mayor of Greater Manchester will serve as the model for his future government, according to Reuters.
ING strategist Francesco Pesole notes that the recent GBP rally has stalled and EUR/GBP has rebounded from an important break lower. At 0.850, the cross remains around 1.5% undervalued versus ING’s short-term fair value model.
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