Dollar Rebound Still Shaky, Gold and Oil Lead the Decline

Market Overview

Risk appetite returned to global markets last Friday as hopes grew for trade agreements between the U.S. and major economies like the EU. This optimism propelled both the S&P 500 and Nasdaq to fresh record highs. However, trade tensions flared between the U.S. and Canada, with talks abruptly terminated. The Canadian dollar plunged to its intraday low, while the U.S. Dollar Index rebounded off near three-year lows to close at the days high—though it still posted its steepest weekly decline in five weeks.

In the commodities space, crude oil posted a staggering 10% weekly loss—its worst in over two years. Gold also dropped nearly 3% for the week, marking its largest weekly decline in six weeks.

As Asian markets opened Monday, U.S. equity futures edged higher, with Dow futures up 0.3%. Meanwhile, spot gold extended losses, breaching the $3,250 level to hit a one-month low. Overall, markets remain caught in a tug-of-war between risk-on sentiment and underlying demand for safe-haven assets.

What to Watch This Week

● U.S. Senate Advances the “Big Beautiful” Bill

After nearly four hours of heated debate, the Senate passed a crucial procedural vote on the so-called "Big Beautiful" bill by a narrow 51-49 margin, allowing it to proceed to final debate. All Democrats and two Republicans voted against it. Three initially opposing GOP senators flipped after last-minute negotiations, securing just enough support to move forward. Democrats are now expected to deploy a “full bill reading” tactic to delay the process, with Majority Leader Schumer vowing to read through the night. A final vote may be delayed until next Monday.

● U.S.-Canada Trade Talks Collapse Over Digital Tax

The U.S. slammed Canadas proposed digital tax, announcing the complete termination of bilateral trade negotiations. Washington is now threatening new tariffs and will not resume talks unless Ottawa rolls back specific tax policies. Treasury Secretary Yellen warned that a Section 301 investigation is imminent. On a broader front, the U.S. and EU remain optimistic about reaching a tariff agreement by the July deadline. However, Yellen hinted that the so-called “tariff deadline” could be pushed to September 1, though an extension or early enforcement remains possible.

Key Events to Watch

• 21:45 GMT+8 – U.S. June PMI (composite)

• 22:00 GMT+8 – Fed 2027 voting member, Atlanta Fed President Raphael Bostic speaks on U.S. economic outlook

• 22:30 GMT+8 – U.S. June Dallas Fed Business Activity Index

• 01:00 GMT+8 (next day) – Fed 2025 voting member, Chicago Fed President Austan Goolsbee speaks