Euro Hits Highest Since 2021 as Tariff Deadline Looms

The euro climbed to its strongest level since September 2021, buoyed by sustained US dollar weakness and growing uncertainty over US trade policy ahead of the July 9 tariff deadline. US stocks ended mixed on Tuesday, with the Dow up nearly 1%, the S&P 500 slightly lower, and the Nasdaq falling 0.82%, while Japan's Nikkei slipped 0.75% and Hong Kong's Hang Seng rose 0.75%. Markets are closely watching Thursday’s US nonfarm payrolls and trade negotiations, as Trump signalled a deal with India may be imminent but ruled out an agreement with Japan.

Equities

The FTSE 100 rose 0.28% on Tuesday, lifted by gains in mining and pharmaceutical stocks, while the FTSE 250 added 0.54%. Shares in AstraZeneca climbed 2.7% following a report in The Times that CEO Pascal Soriot is considering moving the company’s stock market listing to the United States. The report suggests a potential shift to tap into deeper capital markets and attract a broader investor base.

Precious metal miners were also higher, helped by a rise in gold prices as the dollar weakened. Endeavour Mining gained 2.8%, Fresnillo added 1%, and Hochschild Mining rose 5.3%. In contrast, aerospace and defence stocks slipped, with Rolls-Royce falling 2.9% and Babcock down 2.5%.

Sainsbury’s dropped 1.1% despite reporting stronger-than-expected quarterly sales, weighed down by broader weakness in retail stocks. Standard Chartered fell 2% after it was sued in Singapore by the liquidators of Malaysia’s 1MDB fund over alleged fraud tied to $2.7 billion in losses.

Aviva gained 0.8% and Direct Line added 0.5% after the UK’s competition regulator approved their £3.7 billion merger, which will create the country’s largest home and motor insurer.

In the US, the Nasdaq dropped 0.82% to 20,202.89 and the S&P 500 slipped 0.11% to 6,198.01. The Dow Jones rose 0.91%, closing at 44,494.94, led by strength in economically sensitive sectors. Materials and small cap stocks pushed higher, while the Dow Transportation index jumped 2.9%, its biggest daily gain in nearly two months.

Tesla shares dropped 5.4% to a three-week low after renewed tensions between CEO Elon Musk and President Trump. Trump threatened to cut federal subsidies for Musk’s companies, following criticism from Musk over Trump’s new tax and spending package. The NYFANG index, which tracks 10 of the largest US tech stocks, fell 1.8% as investors sold off recent winners.

Casino operators posted strong gains after Macau reported higher gambling revenue in June. Wynn Resorts, Las Vegas Sands, and MGM Resorts each rose more than 7%. The market’s attention is now turning to upcoming US labour data and the July nonfarm payrolls report, with traders reassessing the likelihood of an interest rate cut later this month.

Forex & Commodities

The US dollar steadied on Tuesday after stronger-than-expected labour market data suggested the Federal Reserve may delay cutting interest rates. Job openings in the US rose by 374,000 to 7.769 million in May, pushing Treasury yields higher. The yield on the 10-year note rose 2.3 basis points to 4.25%. Following the data, the dollar trimmed earlier losses against both the Japanese yen and the Swiss franc. The dollar was down 0.29% to 143.58 yen and fell 0.16% to 0.79175 francs, after earlier declines of 0.46% and 0.28%, respectively.

The dollar index, which tracks the greenback against a basket of major currencies, fell 0.08% to 96.682. The euro slipped 0.13% to $1.18020, while the pound rose 0.07% to $1.374 after Prime Minister Keir Starmer cleared a key vote on welfare spending reform in Parliament. Sterling has now risen for two consecutive sessions. Against the offshore Chinese yuan, the dollar edged up 0.08% to 7.162.

Gold held steady at $3,337.12 per ounce, supported by the weaker dollar, while US gold futures were little changed at $3,346. Analysts expect gold to remain sensitive to upcoming US jobs data, particularly Thursday’s non-farm payrolls report. Spot silver was unchanged at $36.06, platinum rose 0.1% to $1,352.50, and palladium climbed 1.3% to $1,114.16.

Brent crude was down 4 cents at $67.07 a barrel and WTI slipped 9 cents to $65.36. Oil prices were weighed by expectations of increased OPEC+ output and a reported 680,000-barrel rise in US crude inventories.