The USD weakened broadly on July 10, with USDJPY falling 0.32% after Japan's Finance Minister signaled support for domestic markets and potential rate hikes. EURUSD traded sideways, while GBPUSD rose 0.10%. Traders eye Canadian employment data amid Middle East tensions and stable eurozone inflation.
USD Weakens Broadly Amid Yen Strength and Policy Signals
The US dollar declined against most major currencies on July 10, with USDJPY leading losses at -0.32%. The yen strengthened after Japan's Finance Minister, Katayama, signaled coordinated efforts to boost domestic financial markets and hinted at gradual interest rate normalization. His comments emphasized encouraging pension funds like the Government Pension Investment Fund (GPIF) to invest in Japanese assets and expanding JGB products for households, reinforcing expectations for stronger domestic demand and capital retention.
EURUSD traded in a narrow range, while GBPUSD edged up 0.10%. The New Zealand dollar (NZD) gained 0.23% following the Reserve Bank of New Zealand's recent rate hike, though other currencies showed only marginal gains against the greenback.
Middle East Tensions and Energy Market Volatility
A fragile calm returned to the Middle East after two days of US-Iran strikes, with diplomatic talks ongoing. However, shipping through the Strait of Hormuz dropped sharply, pressuring global energy markets already strained by supply disruptions. Crude oil rose $0.69 to $72.82, while gold and silver retreated, reflecting mixed risk sentiment.
Eurozone Inflation Data Offers Limited Surprises
Germany's final CPI was confirmed at -0.3% m/m, aligning with expectations, while France's revision to -0.3% m/m suggested a slightly softer inflation backdrop. The data is unlikely to shift ECB policy expectations, keeping the euro under pressure against the dollar.
Canadian Employment Report Looms as Key Risk Event
Traders await Canada's employment data at 12:30 PM ET, with forecasts pointing to 11.2K job gains and a steady 6.6% unemployment rate. Building permits data is also due, with a projected 1.0% monthly increase. The Canadian dollar (CAD) faces volatility as markets assess labor market resilience and its implications for the Bank of Canada's policy stance.
Technical and Market Context
US stock futures hinted at mixed open, with the Dow up 125 points and the Nasdaq down 88 points. The Kospi index rose 2.52% but posted a weekly loss of -7.57%. US Treasury yields edged higher, with the 2-year at 4.180% and the 10-year at 4.547%. Bitcoin traded at $64,368, extending gains amid macro uncertainty.
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