Powell maintains flexibility, Trump's "big and American bill" passes in the Senate, safe-haven demand boosts gold prices

Basic news

On Wednesday (July 2 Beijing time), spot gold trading was around $3,340/ounce, gold prices rose more than 1% on Tuesday, and investors were looking for safe-haven assets. Previously, US President Trump's "big and US bill" was passed in the Senate, and the deadline for the suspension of trade tariffs on July 9 was getting closer; US crude oil trading was around $65.42/barrel, investors digested positive demand indicators, and remained cautious before the OPEC+ meeting decided the organization's production policy in August.

Stock Market

U.S. Nasdaq and S&P 500 closed lower on Tuesday. Dow Jones Industrial Average closed higher in fluctuating trading, with low seasonal liquidity on the day.

Investors have experienced a volatile trading day, and are optimistic about stimulus measures on the one hand, and are cautious about the market focusing on a few technology stocks. Some super-large tech stocks and tech-related momentum stocks have gained particularly strongly in recent weeks, but have been sold out later, causing the market to be more prone to violent fluctuations. The NYFANG index, which tracks 10 active technology stocks, fell 1.8%. "Tech stocks and Nasdaq have reached very overbought levels in the past few weeks, and today, what you're seeing is a massive lifting of this kind of deal," said Farz Azarm, managing director of Risui America's stock trading.

The Dow Jones Industrial Average rose 0.91% to 44,494.94 points. The S&P 500 fell 0.11% to 6198.01 points. The Nasdaq fell 0.82% to 20202.89 points.News from Washington boosted optimism. U.S. President Trump said he did not consider extending the deadline for trade talks between countries and the United States (July 9), eased investors' concerns about long-term uncertainty.

After the Senate passed Trump’s tax bill, investors began to weigh the stimulus effect of the bill against its trillions of dollars’ costs. Tesla suffered a big blow, and its CEO Musk had another dispute with Trump. Meanwhile, economic data supports the Fed's patient position on interest rate cuts.

Tesla fell 5.4%, as Trump threatened to cut off billions of dollars in subsidies received by Musk's www.xmh100.company from the federal government, and Musk once again criticized Trump's widespread tax cuts and spending bills.

The Blue Chip Dow was boosted by economically sensitive materials sectors and small-cap stocks, both outperforming. The Dow Jones Transportation Index, widely regarded as a barometer of the economy, rose 2.9%, the largest single-day gain since May 12.

The data showed that the unexpected increase in job openings in the United States in May suggests that the labor market is resilient despite trade and economic uncertainty. U.S. Treasury prices fell, pushing two-year Treasury yields to their highest in the past week.

Federal Chairman Powell reiterated earlier that the Fed plans to “wait and further understand” the impact of tariffs on inflation before lowering interest rates, once again ignoring Trump’s call for an immediate and significant rate cut.

The American Supply Management Association (ISM) said its manufacturing purchasing managers index (PMI) rebounded slightly to 49.0 from a six-month low of 48.5 in May, slightly higher than economists' forecast of 48.8.

The market focus is currently turning to Thursday's non-farm employment report, which may allow the market to regain expectations for a rate cut as early as July.

According to data from London Stock Exchange Group (LSEG), the money market expects a 21.2% chance of a rate cut in July, and is expected to cut interest rates by about 64 basis points by the end of this year. Gold prices rose more than 1% on Tuesday, with investors seeking safe-haven assets after U.S. President Trump's "Big and U.S. bill" passed in the Senate, and the July 9 trade tariff suspension deadline is getting closer.

Spot gold rose 1% to $3337.09 an ounce, the highest level since June 24. U.S. gold futures rose 1.3% to $3,350.50.

The Republican-majority U.S. Senate voted on Tuesday to pass a wide range of tax cuts and spending bill Trump sought that would cut several social services programs.

Marex analyst Edward Meir said: "The just-passed budget bill provides support because it seems that it will cause a $3 trillion deficit to increase in the next 10 years. This will stimulate inflation to a certain extent, and more importantly, it will increase our debt burden and we must repay it with more financing, more borrowing," said Marex analyst Edward Meir.Debt repayment, all of which are stronger for the gold market. ”

U.S. Treasury Secretary Bescent warned that despite the sincere negotiations, countries may receive notices of a significant increase in tariffs as the July 9 deadline approaches.

Investors are paying attention to U.S. ADP employment data to be released on Wednesday and job data released on Thursday to judge the direction of the Fed’s policy.

Feder Chairman Powell said that excluding tariff factors, inflation performance is in line with expectations and hopes. The market is currently expecting the Fed to cut interest rates twice this year, each cut by 50 basis points, starting from September.

Rhona O'Connell, head of market analysis at StoneX, Europe, Middle East and Africa and Asia, said the average gold price in the fourth quarter May reach $3,000 per ounce, and may even be even lower by the end of the year.

Spot silver rose 0.2% to $36.15 per ounce, palladium rose 0.1% to $1,095.87, and platinum fell 0.9% to $1,340.80.

Oil market

Oil prices rose Tuesday as investors digested positive demand indicators while remaining cautious before the OPEC+ meeting decided on the organization's August production policy.

Brent crude closed up 0.6% to $67.11 per barrel; U.S. crude closed up 0.5% to $65.45 per barrel. Risk intelligence from U.S. oil brokerage firm LiquidityEnergy Expert Randall Rothenberg said the gains could be due to economic data from major Asian powers, with Saudi Arabia saying that expectations that Saudi Arabia would raise crude oil prices to four-month highs in August and the strong premium of Russian ESPO mixed crude oil also supported strong demand. OPEC+ will increase its August crude oil production, which will be similar to the sharp increase agreements reached in May, June and July, which curbs the crude oil rise. Four sources at the OPEC+ organization told Reuters last week that the organization plans to increase production by 411,000 barrels per day at its July 6 meeting.

Kpler data showed that O Saudi Arabia, the actual leader of the PEC+ group, raised its crude oil exports in June to its highest in a year.

Investors are also watching trade talks ahead of the July 9 tariff exemption deadline. Trump said on Tuesday he was not considering extending the deadline.

Foreign market

The dollar fell against major currencies such as the yen and Swiss franc on Tuesday, but narrowed its decline after data showed that labor market demand grew better than expected.

The Republican-controlled U.S. Senate passed President Trump’s tax and expenditure bill, approved a massive package that would write many of his top priorities into the law and would increase U.S. debt by $3.3 trillion.The bill will be submitted to the House for final approval.

Feder Chairman Powell reiterated at a central bank meeting in Portugal on Tuesday that the Fed plans to "wait and learn more" about the impact of tariffs on inflation before cutting rates, once again ignoring President Trump's call for an immediate and substantial rate cut.

The dollar narrowed against the yen and Swiss franc after U.S. Department of Labor data showed unexpected increase of 374,000 job openings to 7.769 million in May. The dollar narrowed its decline against the yen further after the U.S. Senate passed a spending bill. The dollar fell 0.29% against the yen to 143.58 yen and fell 0.16% against the Swiss franc to 0.79175, while the data fell 0.46% and 0.28% respectively before the release.

Matthew Weller, global head of market research at StoneX, said this was the worst first half of the U.S. dollar index since 1973, and a large part of the weakness was driven by concerns about trade policy and concerns about a slowdown, but I think in the short term, we may see the markets a little over-trend here, and I think the dollar may rebound in July.

The dollar index, which measures the dollar's exchange rate against a basket of currencies (including the Japanese yen and the euro), fell 0.08% to 96.682 points late in trading. U.S. Treasury yields rose after job opening data were released. The benchmark U.S. 10-year Treasury yield rose 2.3 basis points to 4.25%. "If the Fed cuts interest rates, it will narrow the spread, and we see the July cut expectations become slightly more radical, reaching 20%; a few weeks ago, it was still 0%. They will definitely cut interest rates in September, and the arguments are a little changed." British Prime Minister Stamer cleared the first obstacle to his search for reform of the welfare system, thwarting attempts by lawmakers against the proposed law to stop its progress. The proposed reforms aim to reduce the cost of the UK's growing £65 billion welfare bill, which the government says is economically untenable and morally wrong. The euro fell 0.13% to $1.18,020, and had risen 0.05% earlier in the day.

The pound reversed its earlier decline and rose after the British Parliament vote ended. The pound rose 0.07% against the US dollar against the US dollar in New York to $1.374, rising for two consecutive trading days.

International News

The US Department of Defense suspends the provision of partially promised arms to Ukraine

On July 1, local time, the US Department of Defense has stopped shipping some air defense missiles and other precision-guided weapons to Ukraine due to concerns that the U.S. weapon inventory is too low. The total number of U.S. artillery shells, air defense missiles and precision-guided weapons is decreasing, people familiar with the matter said. The initial decision to suspend part of the assistance to Ukraine was made in early June but it did not take effect until now.

Mexican oil production fell to late 1970s

Mexican oil production is dropping sharply to levels in the late 1970s, posing a threat to U.S. refiners, especially when Mexican oil is most needed during the summer driving season. The decline in production www.xmh100.combined with the expansion of DosBocas, Mexico's largest refinery, has reduced oil supply to overseas markets. According to shipping reports and ship trends www.xmh100.compiled by foreign media, Mexico's exports plummeted to 529,000 barrels per day in June, a record low. Mexico's average daily oil production this year is 1.621 million barrels, a new low since 1979, when Cantarell's large oil fields produced oil for the first time. Mexico has not been able to discover oil fields as large as the Cantarell oil field’s 35 billion barrels of oil.

Trump: Not considering extending the deadline for tariff negotiations may raise Japan's tariffs

U.S. President Trump said on Tuesday that he did not consider extending the deadline for negotiating trade agreements between countries and the United States - July 9, and expressed doubts about whether an agreement can be reached with Japan. "We have dealt with Japan. I'm not sure if we can reach a deal. I doubt that." Trump said he could impose tariffs on goods imported from Japan "30%, 35%, or any number we decided on", which is much higher than the 24% tax rate he announced on April 2.

The Trump administration officially closed the US Agency for International Development

The Trump administration announced on the 1st that it would officially close the US Agency for International Development, which has been in operation for nearly 64 years from now on. US Secretary of State Rubio issued a statement on the same day saying that the US Agency for International Development officially stopped implementing foreign aid tasks from the 1st, and some remaining projects that www.xmh100.comply with Trump's administration's policies were handed over to the US State Department for implementation. The statement said that the US Agency for International Development spent more than $715 billion in decades, using American taxpayers' money to create a "global NGO industrial www.xmh100.complex", but since the end of the Cold War in the 1990s, its work "has little effect... The development goals (assisted areas) have rarely been achieved, the instability often intensifies, and anti-U.S. sentiment only increases but does not decrease." The statement said that the humanitarian aid and promotion of overseas economic development projects implemented by the United States must serve the "U.S. priority" foreign policy.

"Federal Mickey Bucket": Powell maintains flexibility The decision-making factors for interest rate cuts have changed

"Federal Mickey Bucket" Nick Timiraos said that Powell avoided a sharp issue in July (rate cuts) and refused to rule out any possibility four weeks before the policy meeting. His overall www.xmh100.comments have little indication that he is preparing for the rate cut this month. It is inappropriate to focus on July’s “over” (at least today) and it may mask the more subtle changes in his and others’ remarks in recent weeks. After the Liberation Day tariffs, there is a speculation that price increases may be so large that a substantial weakness in the labor market is required to cut interest rates. But recently, with the suspension of tariffs and early (maybe too early?)The inflation readings did not show meaningful effects, and Powell suggested that interest rate cuts could resume if inflation wasn't as bad as feared.

The U.S. Senate passed the "Big and American" bill

On July 1 local time, the U.S. Senate passed a www.xmh100.comprehensive tax cut and expenditure bill and submitted it to the House of Representatives. The U.S. Senate voted 51 to 50 that morning. During this time, senators voted on dozens of proposed legislation changes. Vance, a Republican vice president who also serves as the chairman of the Senate, voted to "break the deadlock" with a "flat vote" of 50 votes in favor and 50 votes against. The amendment was passed with a 51-50 vote. The amendment bill, which Trump calls “big and beautiful”, will now return to the House, which House Speaker Mike Johnson will fight to pass before the July 4 deadline set by Trump.

Bank of Japan Governor hinted that it would not raise interest rates for the time being, saying that it may not be able to www.xmh100.complete the balance sheet reduction task before leaving office.

Bank of Japan Governor Kazuo Ueda emphasized a wait-and-see position, saying that he would wait for more data before deciding on the next monetary policy, and suggested that he would not rush to increase lending costs for the time being. He said at the annual meeting of the European Central Bank in Sintra, Portugal, that "we need more inflation data to judge." It mentioned that the central bank is paying attention to the strength of core inflation, the impact of US tariffs, and the food inflation expected to gradually ease. Kazuo Ueda also said he may not be able to meet his balance sheet reduction goal before the end of his term.

Federal Chairman Powell: Tariffs bring uncertainty, resulting in a delay in interest rate cuts

On July 1, local time, Federal Reserve Chairman Powell said at the meeting in Sintra, Portugal that if it were not for the tariff policy of US President Trump, the Fed would have started to cut interest rates in 2025 and would now adopt a looser monetary policy. When asked whether the uncertainty caused by the current tariff system in the U.S. government has led to the Fed's delay in rate cuts, Powell gave a positive answer, adding that almost all forecasts for U.S. inflation have risen sharply due to the impact of tariffs. Powell acknowledged that despite increasing pressure from the U.S. government, the Fed is still entering a pattern of maintaining interest rates. Powell also said that given the instability of the current economic outlook, the Federal Reserve is still waiting and watching the situation to learn more. Additionally, when asked about the possibility of a rate cut in July, Powell said he would not rule out any possibility and would not "put it directly on the table", which would depend on how the data evolved. Powell said the "overwhelming majority" of the Fed's interest rate setting www.xmh100.committee does expect another rate cut later this year.

Domestic News

my country's vegetable seed self-sufficiency rate is close to 91% The tomato breeding chip is on the market this year

It is understood that my country's vegetable seed self-sufficiency rate is close to 91%, which effectively guarantees the richness of the "vegetable basket". Laboratory in Tongzhou International Seed Industry Park, BeijingThe staff showed the reporter the domestic solid-phase chip detection equipment and solid-phase chip that were just developed this year. Based on this breakthrough in chip technology, they launched the first tomato breeding independent solid-phase gene chip project in May this year. It is understood that the tomato breeding chip they developed is expected to be launched at the end of this year. After formal www.xmh100.commercial application, the cost of genetic testing will be reduced from 120 yuan per sample to 40 yuan, and the application scope will cover upstream tomato molecular breeding, variety selection, and downstream variety identification.

The above content is about "[XM Foreign Exchange Market Analysis]: Powell maintains flexibility, Trump's "Big and Beauty Proposal" passed in the Senate, and safe-haven demand boosts gold prices" is carefully www.xmh100.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your transactions! Thanks for the support!

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