Dollar Kicks Off A New Quarter With Another Decline – Currency Thoughts
Dollar Kicks Off A New Quarter With Another Decline
July 1, 2025
The weighted DXY dollar index slipped 0.4% overnight to a fresh 3-1/2-year low. The dollar lost 0.8% to the yen and Aussie dollar, 0.6% against the Swiss franc, 0.4% against sterling and 0.2% relative to the euro, which at $1.1809 currently is very close to the common currency’s launching level of $1.1876 at the start of January 1999. The euro has ranged from as weak as$0.8228 in October 2000 to as high as $1.6000 in July 2008.
Ten-year sovereign debt yields fell overnight by seven basis points in the U.K., six bps in the four largest economies of Euroland, and four basis points in the United States and Japan.
Equity markets in Asia closed down 1.2% in Japan, 0.9% in Hong Kong and 0.2% in Indonesia but up 1.3% in Taiwan, 0.6% in South Korea and Singapore and 0.4% in China. European stock markets and U.S. stock futures lost some ground following strong gains at the end of the second quarter.
The price of gold and oil rose 1.7% and 0.9% overnight, while Bitcoin slipped 0.6%.
Data releases this first day of July featured June manufacturing purchasing managers survey and the Bank of Japan’s quarterly Tankan survey of corporate business conditions and expectations.
Manufacturing PMI surveys were reported for over 30 economies. Readings above 50 connote improvement, while those below signal activity that contracted. In June, readings below 50 exceeded those above that threshold by an approximate ratio of 57% to 43%. By a similar ratio, however, the June readings were above May results.
In the Bank of Japan’s Tankan survey, the summary diffusion index for large manufacturers (+13) edged a point above the March four-quarter low. The reading among all 8.911 firms that were surveyed was unchanged at +15. Respondents anticipate a lower score in the September survey. The Tankan also revealed a sharp increase in projected business investment spending this fiscal year, which is now projected at 6.7% for all firms, 14.3% among large manufacturers and 11.5% for all large companies.
Euroland’s June manufacturing purchasing managers index was revised marginally higher to a 34-month high of 49.5. Demand has stabilized after an extended period of contraction, future confidence has improved to a 40-month high, and inflation is better behaved. Only Spain among the four largest economies using the euro had a PMI above the 50 threshold, and the French and Italian readings were each below their scores in May.
The British PMI was left unrevised at 47.7, a 5-month high. Conditions seem to be stabilizing, but significant risks will have to be overcome such elevated tariffs, geopolitical tensions, and the Labour government’s own fragility.
After a year of sub-50 PMI readings, the Japanese score climbed 0.7 points to a 13-month high of 50.1, which nonetheless was not as high as the preliminary estimate of 50.4.
China’s manufacturing PMI bounced above May’s 33-month low of 48.3 to match April’s score of 50.4.
India’s PMI reading of 58.4 was unrevised from a flash estimate and signals the strong growth in manufacturing in 14 months.
Among other Asian PMIs, those of Taiwan (an 18-month low of 47.2) and Vietnam (a 2-month low of 48.9) fell, whereas increases from May scores were reported in Thailand (a 10-month high of 51.7), the Philippines ( a 2-month high of 50.7), Malaysia (a 4-month high of 49.3), and South Korea (a 3-month high of 48.7).
Australia’s PMI had been initially estimated as unchanged from May’s 51.0 but has been revised to a 4-month low of 50.6.
Turkey’s manufacturing PMI fell further below the 50 threshold to an 8-month low of 46.7 in June.
South Africa’s Absa-compiled PMI exceeded expectations at a 3-month high of 48.5 in June.
The damage to Russia’s manufacturing sector from the war with Ukraine is reflected in a 39-month PMI low of 47.5.
Elsewhere in Eastern Europe, the Czech PMI rose 2.2 points to a 25-month high of 50.2. Hungary’s 48.9 PMI constitutes an 8-month low, and Poland’s index dropped 2.3 points to a 20-month low of 44.8.
The Swedish (49.6) and Norwegian PMI (49.3) readings fell to 9- and 2-month lows in June.
But the Swiss index moved closer to neutrality, printing at a 4-month high of 49.6 and surpassed analyst expectations.
Other data highlights out this Tuesday include Japanese consumer confidence and Euroland consumer prices. Japanese household sentiment has hovered below 40 since May 2019 but exceeded expectations last month with a 4-month high of 34.5 versus 32.8 in May and 31.2 in April.
Consumer price inflation in the euro area aligned perfectly with analyst forecasts and the ECB’s preference for 2.0%. Such was up from 1.9% in May and last September’s trough of 1.7% and embodied an unchanged 2.3% core rate of price growth (excluding food and energy).
CPI inflation in Indonesia rose about a quarter percentage point to a 2-month high of 1.87% in June but stayed within Bank Indonesia’s 1.5-3.5% target range.
Swiss retail sales underperformed expectations, falling 0.6% on month and showing no year-on-year net movement in May. Over the same span, Dutch and Portuguese retail sales advanced 2.2% and 4.8%.
The Nationwide index of British home prices posted only a 2.1% year-on-year rise in June, smallest in 11 months. The BRC measure of shop prices in the U.K. was 0.4% higher in May than a year earlier.
Now In: The U.S. S&P Global PMI surpassed expectations, rising to its highest level in June (52.9) in 37 months. Brazil’s PMI, however, fell 1.1 points to a 23-month low of 48.3.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Japan Tankan, Euroland CPI, manufacturing purchasing manager surveys June 2025
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