The dollar rose in European trade on Tuesday on track for the second rise in a row away from recent six-week lows, ahead of important US data on retail sales for June, which will provide clues on the strength of economic performance in the second quarter.
The dollar is pressured by lower US 10-year treasury yields following less aggressive remarks by Fed Chair Powell, which boosted the odds of Fed rate cuts in September and November.
The Index
The dollar index rose 0.15% to 104.40, with a session-low at 104.23.
The index closed up 0.2% yesterday, the first profit in four days away from six-week lows at 104.03.
US Retail Sales
Investors await important US June retail sales data, crucial for gauging the health of the economy as consumer spending represents 70% of total GDP.
US Yields
US 10-year treasury yields fell by 1.4%, on track to hit multi-month lows, in turn hurting investments in the dollar.
The developments came following less aggressive remarks by Fed Chair Jerome Powell this week.
Fed Chair Jerome Powell said in an earlier speech in Washington that latest consumer prices data bolsters confidence that inflation is returning to the 2% target sustainably, with three consecutive readings presenting better than expected results.
US Rates
Following the remarks, the odds of a 0.25% September rate cut by the Federal Reserve rose to a full 100% according to the Fedwatch tool, with a similar 100% likelihood of a rate cut in November.
Euro rose in European trade on Tuesday against a basket of major rivals, resuming gains and moving once again near four-month highs against the dollar on hopes of reducing the EU-US interest rate gap.
The European Central Bank will likely refrain from a rate cut at this week’s meeting, while the Federal Reserve is increasingly likely to cut rates both in September and November after less aggressive remarks by Fed Chair Powell.
Prices
The EUR/USD rose 0.1% today to $1.0899, with a session-high at $1.0884.
The pair lost 0.1% on Monday, the first loss in four days, away from four-month highs at $1.0922.
The euro was hurt back then due to rising risk aversion after the failed assassination attempt on ex-US President Donald Trump.
The ECB
Later today, the European Central Bank will hold a policy meeting to discuss conditions and proper rate decisions, which will be issued tomorrow, with most analysts expecting no changes.
The ECB cut first rates last June for the first time since 2016 after a long wave of rate hikes, however it refrained from any further moves.
US Rates
Fed Chair Jerome Powell said in an earlier speech in Washington that latest consumer prices data bolsters confidence that inflation is returning to the 2% target sustainably, with three consecutive readings presenting better than expected results.
Following the remarks, the odds of a 0.25% September rate cut by the Federal Reserve rose to a full 100% according to the Fedwatch tool, with a similar 100% likelihood of a rate cut in November.
Rate Gap
The current interest rate gap between Europe and the US holds at 125 basis points in favor of the US, and will likely shrink in September, in turn boosting the euro against the dollar.
Yen fell on Tuesday against a basket of major rivals, extending losses for the second day against the dollar and backing off four-week highs on profit-taking, as markets await confirmation of the BOJ’s suspected intervention in the forex market last Friday.
Dollar’s gains are stymied by less aggressive remarks by Fed Chair Jerome Powell this week, which boosted the odds of multiple rate cuts this year.
The Price
The USD/JPY pair rose 0.5% today to 158.73, with a session-low at 157.98.
The yen lost 0.1% on Monday, the first loss in three days away from four-week highs at 157.17 yen per dollar.
BOJ Intervention
Bank of Japan’s daily operations data showed it spent upwards of nearly $22 billion on Thursday to prop up the currency.
The yen marked strong gains against most major rivals even on Friday, raising speculation it might have intervened once again on Friday.
The BOJ spent nearly $61.55 billion in late April to boost the yen and intervene back then.
US Rates
Fed Chair Jerome Powell said in an earlier speech in Washington that latest consumer prices data bolsters confidence that inflation is returning to the 2% target sustainably, with three consecutive readings presenting better than expected results.
Following the remarks, the odds of a 0.25% September rate cut by the Federal Reserve rose to a full 100% according to the Fedwatch tool, with a similar 100% likelihood of a rate cut in November.
Apple’s stock price surged on Monday to a record high, extending gains for the second straight session amid expectations of a new surge in sales and profits as Apple integrates AI technology into the iPhone 16.
Apple’s stock is up over 20% this year, bringing the company’s value to $3.62 trillion and making it the world’s most valuable publicly trading company once more.
And several Wall Street analysts have \upgraded Apple’s stock price target even further for this year.
The Price
Apple’s stock price rose 2.9% today to $237.23, a record high, with a session-low at $233.3.
At Friday’s close, Apple’s stock was up 1.3%, resuming gains after a short hiatus on Thursday.
Apple’s stock gained 1.9% last week, the third weekly profit in a row on strong purchasing sentiment.
Value Surge
Apple added nearly $300 billion to its market value since announcing plans to integrate AI technology into the new iPhone 16, which investors are now betting will lead to a surge in purchases.
Apple Intelligence
Apple has called the new technology “Apple Intelligence”, and it’s a reworking of the digital assistant Siri, with a suite of new services for its current base of phones estimated at 2.2 billion worldwide.
Apple is trying to catch up to Google and Microsoft-backed Open AI with the new tech, while convincing clients to upgrade their phones to use the new tech.
Upgrading the Stock
Several analysts recently upgraded Apple’s target price by $130 to $300 due to the new AI technology announcements.
Apple now has a chance to become a serious player and beneficiary in the AI sector.
Morgan Stanley’s Upgrade
Analysts at Morgan Stanley expect the new AI technology to boost Apple’s sales considerably, with potential sales of 500 million iPhones in the next two years.
That’s a massive upgrade from Morgan Stanley’s previous forecasts of 230 million-235 million iPhones of total sales in the next two years, with the bank upgrading the price target to $273.
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