June 24, 2025

“Trump’s surprise ceasefire announcement and dovish commentary from the Fed have pushed the dollar back towards its lows of the year overnight. All eyes are on Powell today and whether he gives any dovish signals following intense criticism.”

Tim Hallinan – Trading Director

USD

President Trump spun heads again yesterday, as he announced a ‘Complete and Total CEASEFIRE’ between Iran and Israel last night that sucked out the bulk of the geopolitical risk priced into markets. The result was a 13% drop in oil, a 1.5% fall in the dollar index, a 2% decline in gold, and a rebound in stock futures overnight. Markets were nervous when news broke that Iran had launched a missile attack at a US military base in Qatar, but it soon became clear that it was a calculated opening for de-escalation, with only six missiles being shot at an empty base. It cannot be guaranteed that the ceasefire will hold, but markets can breathe again for now.

This all means that investors can put their full focus on the Fed today. Compounding the dollar’s losses yesterday were comments from Michelle Bowman, who typically skews hawkish but this time said that she was open to cutting as soon as next month. The market has since begun to price in a chance for a third rate cut this year. Chair Powell faces a long questioning in front of the House today amid a wave of criticism from Trump and his allies over the lack of rate cuts this year. Trump said this morning that he hopes ‘Congress really works this very dumb, hardheaded person, over’. Any signal that Powell is open to tilting more dovish will be an opportunity for the dollar to weaken further.

GBP

A 1.6% jump in GBPUSD launched it from the 1.33s to almost 1.36 overnight as risk appetite returned to markets. GBPEUR is also trying to stabilise above the 1.17 mark this morning. Yesterday’s PMI figure beat expectations only very slightly with a 50.7 print, though there was little excitement for sterling given the 0.1% growth indication for Q2 and continued signs that employers were cutting jobs. As in the US, the focus today is on central bankers, with the first post-decision speeches coming from more than half of the MPC: Gov Bailey, Greene, Ramsden, Pill, and Breeden.

EUR

With the Israel-Iran war out of sight – for now, at least – the euro finds itself back to testing multi-year highs. The PMIs reminded us again yesterday that this has been predominantly a dollar move rather than any significant improvement in eurozone fundamentals, with the composite index printing at 50.2 and the report warning of ‘minimal’ growth for six months now. Today, we get a German business confidence survey and speeches from Lagarde and Lane at the ECB.

Markets

The news of a ceasefire in the Middle East rapidly improved the picture for risk appetite and the major stock indexes, which look set to open 1-2% higher across the board today. The S&P 500 rebounded strongly late in the session yesterday to finish up 1%.

Main Economic Events (All Times CET)

10:00am: German Ifo Business Climate
2:30pm: Canada CPI Inflation
4:00pm: Fed Chair Powell testifies to House
4:00pm: US Consumer Confidence

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