Fed Holds Rates Steady as U.S. Dollar Index Eyes the 100 Level

Market Overview

The Federal Reserve kept rates unchanged at its July policy meeting, yet risk appetite in the market remains red-hot. Meta and Microsoft both delivered Q2 earnings that exceeded market expectations. Following its earnings release, Metas stock surged 11% in after-hours trading as the company raised its full-year CapEx guidance from $66 billion to $72 billion. Microsoft shares climbed more than 8% after-hours, with Q2 CapEx at $24.2 billion and Q3 expected to reach $30 billion. All three major U.S. cloud service providers have signaled continued expansion of AI-related capital expenditures. U.S. equities, led by the Nasdaq, continue to push record highs. Gold, however, faced dual headwinds and extended its decline to as low as $3,267/oz, while the U.S. Dollar Index aims to test the key 100 level.

Hot Topics Outlook

• Fed Holds Rates, Precious Metals Slide

• On Wednesday, Fed Chair Jerome Powell maintained a wait-and-see stance, keeping rates unchanged. The U.S. Dollar Index rose to 99.92, up 1.04% and marking its highest level in over two months, with the 100 level in sight. U.S. Treasury yields climbed across the curve: the benchmark 10-year yield closed at 4.37%, while the 2-year yield settled at 3.951%. Gold briefly fell below $3,270/oz, ultimately closing 1.55% lower at $3,274.85/oz. Silver mirrored golds trajectory, dropping 2.8% to $37.11/oz.

• Trump Sticks to Hardline Reciprocal Tariff Negotiations

• Trump reaffirmed that the August 1 deadline will not be extended. Beginning August 1, India will face a 25% tariff and fines for purchasing military equipment and energy from Russia. Imports of semi-finished copper products will be subject to a 50% tariff—excluding copper ore and cathode copper—sending U.S. copper prices plunging 18%. Brazil will see tariffs rise by 40%, bringing the total to 50%, with exemptions for aircraft and energy sectors; this will take effect in seven days. Finally, a comprehensive trade deal was reached with South Korea: the U.S. will impose a 15% tariff, while South Korea will invest $350 billion and purchase $100 billion worth of energy products.

Key Events to Watch (GMT+8)

• 10:30 Bank of Japan Monetary Policy Statement

• 14:30 Bank of Japan Governor Press Conference

• 15:00 China Ministry of Commerce – July 4th Regular Press Briefing

• 19:30 U.S. Challenger Job Cuts

• 20:30 U.S. Initial & Continuing Jobless Claims

• 20:30 U.S. PCE Price Index (YoY & MoM)

• 21:45 U.S. Chicago PMI