Dollar eased slightly in today’s Asian session but remains firmly in the lead as the top-performing currency for the week. Fed Governor Christopher Waller reignited the debate over rate cuts, calling for easing as soon as this month. But his comments — timed just ahead of the Fed’s blackout window — failed to shift expectations. Market pricing still implies overwhelming odds of over 97% for no change in July.
The lack of reaction is telling. Waller, though vocal, isn’t seen as representing the majority view, particularly in light of steady inflation and resilient growth. As a voting committee, the FOMC doesn’t take marching orders from a single official — not even the Chair, whose own independence has been under political pressure recently. Markets appear unconvinced that Waller’s remarks signal any imminent pivot. After all, the consensus leans toward staying on hold and watching how tariffs evolve after August 1 tariff truce deadline.
That patience looks justified. US jobless claims fell more than expected and retail sales rebounded, suggesting consumers are recovering from tariff-related uncertainty without a major hit to spending. That resilience is also reflected in risk sentiment, with S&P 500 and NASDAQ both notching fresh record highs overnight.
In FX, Dollar is still the strongest performer this week, trailed by the Loonie and Sterling. At the other end, Aussie has been the weakest following disappointing jobs data, while Kiwi and Yen also struggled. Euro and Swiss Franc are sitting near the middle of the weekly performance table.
Meanwhile, crypto markets are watching Washington closely. The US House passed the long-anticipated Genius Act, establishing a regulatory framework for dollar-pegged stablecoins. The bill received strong bipartisan support and is expected to be signed by US President Donald Trump. It marks a major legislative win for the digital asset industry, which has invested heavily in shaping crypto policy.
While Bitcoin turned sluggish this week, Ethereum is surging. Technically, Ethereum is clearly in upside acceleration as seen in D MACD. Immediate focus is now on 100% projection of 1382.55 to 2879.27 from 2100.58 at 3607.30. Decisive break there will pave the way through 4000 psychological level to 161.8% projection at 4532.23. In any case, near term outlook will now stay bullish as long as 2879.27 resistance turned support holds.
In Asia, at the time of writing, Nikkei is down -0.20%. Hong Kong HSI is up 0.73%. China Shanghai SSE is up 0.34%. Singapore Strait Times is up 0.54%. Japan 10-year JGB yield is down -0.021 at 1.539. Overnight, DOW rose 0.52%. S&P 500 rose 0.54%. NASDAQ rose 0.75%. 10-year yield rose 0.008 to 4.463.
Fed’s Waller sees no reason to wait, backs immediate rate cut
Fed Governor Christopher Waller reinforced his call for a July rate cut, arguing that the policy rate is too restrictive given current economic conditions.
In a speech, Waller emphasized that recent tariffs will only cause a “temporary surge” in prices, not a sustained increase in inflation, and that standard monetary policy practice is to “look through” such one-off price-level shocks as long as expectations remain anchored.
Waller pointed to sluggish growth and moderate inflation as reasons for a cut. He noted that real GDP likely expanded just 1% in the first half of 2025 and is expected to remain soft for the rest of the year—well below FOMC estimates of longer-run growth. With unemployment near 4.1% and inflation close to 2% when tariff effects are stripped out, Waller said policy “policy rate should be around neutral”, not nearly 125–150 basis points above the estimated neutral rate of 3%.
Waller also flagged labor market fragility, suggesting that once data revisions are accounted for, private payroll growth is “near stall speed.” With risks to jobs increasing and inflation pressures fading, Waller said, “We should not wait until the labor market deteriorates before we cut the policy rate.”
Fed’s Daly backs two cuts this year, sees tariff impact as muted
San Francisco Fed President Mary Daly said two interest rate cuts this year remain a “reasonable” baseline, as the inflation from tariffs appears less severe than initially feared. Speaking overnight. She projected the policy rate could ultimately stabilize around 3% or slightly above.
Daly downplayed the precise timing of the next move, saying, “Whether it happens in July or September or some other month is really not the most relevant piece.” What matters, she argued, is that the Fed stays on track to avoid overtightening and harming the labor market. “We don’t want to unnecessarily tighten the economy in a way that hurts the labor market or growth,” Daly added.
She also emphasized that bringing inflation down the “last mile” doesn’t require a sharp slowdown. “I wouldn’t want to see more weakness in the labor market,” Daly said. “Which is why you can’t wait forever” to cut rates.
Japan CPI core cools to 3.3% on energy, but food and services prices still climb
Japan’s core consumer inflation slowed in June for the first time in four months, driven by easing energy prices. Core CPI, which excludes fresh food, decelerated from 3.7% yoy to 3.3% yoy, in line with expectations. While still above the BoJ’s 2% target — where it’s been since April 2022 — the moderation suggests waning energy cost pressures. Headline CPI also dipped to 3.3% from 3.5% in May.
However, underlying price pressures remain sticky. The core-core CPI, which excludes both fresh food and energy, rose from 3.3% yoy to 3.4% yoy, highlighting persistent inflation in services and food. Services inflation ticked up from 1.4% yoy to 1.5% yoy. Food prices excluding fresh items surged 8.2% yoy, up from 7.7% yoy. Rice inflation eased marginally but remains historically elevated at 101.7% yoy.
USD/CAD Daily Outlook
Daily Pivots: (S1) 1.3698; (P) 1.3736; (R1) 1.3792; More…
Intraday bias in USD/CAD remains mildly on the upside for the moment. Corrective pattern from 1.3538 is extending with the third leg. Further rise would be seen to 1.3797 resistance and possibly above. On the downside, break of 1.3650 minor support will bring retest of 1.3538/55 support zone instead.
In the bigger picture, price actions from 1.4791 medium term top could either be a correction to rise from 1.2005 (2021 low), or trend reversal. In either case, further decline is expected as long as 1.4014 resistance holds. Next target is 61.8% retracement of 1.2005 (2021 low) to 1.4791 at 1.3069.
