Tuesday started on a quieter note after calm Monday, even with Japan’s return from holiday and limited economic data keeping market action subdued. However, global sentiment remains shaky due to geopolitical risks, including renewed Middle East fears after Donald Trump threatened Iran over uranium enrichment. Traders are also on edge ahead of the August 1 U.S. tariff deadline and speculation about political pressure on the Federal Reserve (Fed).
U.S. Treasury Secretary Jane Bassent eased some nerves, saying trade talks are delayed but still on track. Yet concerns over Fed independence and remarks from BoE Governor Andrew Bailey, who called the short-dollar trade “crowded,” added to uncertainty.
Tensions also simmer as Ukraine-Russia peace talks in Turkey approach, while analysts at T.S. Lombard warned of political interference in the Fed and long-term threats to the U.S. Dollar’s global dominance.
Trade negotiations between the U.S., EU, and Japan are in focus, especially with Japanese PM Ishiba under pressure after his party lost its majority. Meanwhile, upcoming U.S. data like the Richmond Fed Manufacturing Index and ECB inflation expectations hint at mixed global outlooks, with potential rate cut talk supporting the Euro.
On Wall Street, tech stocks drove the Nasdaq to record highs, boosted by Verizon’s strong earnings. The S&P 500 posted modest gains, but the Dow slipped amid trade concerns. Hopes for strong results from Alphabet and Tesla kept bullish sentiment alive.
In crypto, Bitcoin (BTC/USD) gained on continued institutional inflows, while Ethereum (ETH/USD) paused after hitting a yearly high, forming a Doji and activating a pullback on Tuesday.
The U.S. Dollar Index (DXY) saw its biggest drop since late June on Monday, but stayed sideways on Tuesday. Gold climbed past key resistance on safe-haven flows and dollar weakness, though upside momentum faded soon after. Crude oil stayed under pressure, weighed down by expectations of higher inventories and OPEC+’s output strategy, despite escalating U.S.-Iran tensions.
Latest moves of key assets
- Gold struggles after hitting 5-week high, testing 2-day uptrend as it seesaws around $3,400 after jumping to $3,403.
- Bitcoin (BTC/USD) climbs 1.5% intraday, holding firm above $119,300 and extending week-start rebound.
- Ethereum (ETH/USD) sees first daily drop in 10 sessions, down 1.45% to $3,709.
- U.S. Dollar Index (DXY) struggles for direction near 97.80 after two-day slide.
- Wall Street ends mixed – Nasdaq near record highs, S&P posts small gains, Dow slips; U.S. futures and global stocks trade slightly lower.
- WTI Crude dips 0.60% to $65.30, staying weak after Monday’s drop.
What’s Next?
Tuesday brings more action than Monday, with focus on Fed official speeches (minus policy talk due to the blackout period), the U.S. Richmond Fed Manufacturing Index, ECB Bank Lending Survey, and API crude inventory data. While Fed Chair Jerome Powell and others are expected to avoid economic comments, traders will still watch for tone shifts.
Tech stocks may stay firm ahead of Alphabet’s earnings after the close, with a strong result likely to boost risk appetite — pressuring the U.S. Dollar and supporting risk assets, including crypto. However, dollar moves may remain capped as markets await key data like PMIs and Durable Goods Orders, plus Thursday’s ECB decision.
Crypto bulls may also stay optimistic amid continued institutional flows and “Crypto Week” buzz. Still, with mixed catalysts and event risk ahead, traders are likely to tread cautiously.
