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The U.S. dollar slipped on Monday, hovering near its lowest levels in years, as investors grew increasingly optimistic about potential trade agreements and the likelihood of the Federal Reserve easing interest rates soon.

By 04:10 ET (08:10 GMT), the Dollar Index, which measures the greenback against a basket of six major currencies, declined 0.2% to 96.81, approaching its weakest point since March 2022. The index is on track for a sharp 2.6% drop over June.

Trade Deal Progress Spurs Rate Cut Expectations

Market sentiment has improved following announcements of key trade developments: the U.S. and China finalized a deal last week, and Canada scrapped its digital services tax to revive stalled negotiations.

Furthermore, European Commission President Ursula von der Leyen reportedly expressed confidence in reaching a U.S.-EU agreement before the July 9 deadline, when new tariffs could take effect on both sides. The avoidance of these tariffs—which could drive inflation higher—may encourage the Federal Reserve to lower rates.

Fed Chair Jerome Powell’s recent congressional testimony was viewed as dovish, suggesting rate cuts are likely if inflation does not surge due to tariffs this summer. According to CME Group’s FedWatch Tool, the probability of at least one quarter-point rate cut by September has climbed to 91.5%, up from 83% a week earlier.

The Fed’s next policy meeting is in July; no meeting is scheduled for August. Investors also remain watchful of a major tax-cut and spending bill pending in the Senate, which could add $3.3 trillion to the national debt over ten years, per the Congressional Budget Office.

European Currency Moves and Economic Data

The euro edged up 0.1% to 1.1730 against the dollar, close to last Friday’s peak of 1.1754, the highest since September 2021, benefiting from dollar softness. Domestic economic factors had a more modest influence on the euro’s climb.

German retail sales fell sharply by 1.6% in May compared to April, casting doubt on strong economic growth prospects for Europe’s largest economy this quarter. Meanwhile, upcoming inflation reports from Germany and Italy are expected to show a slight acceleration in eurozone inflation.

Analysts at ING noted that while markets currently price in the European Central Bank’s first rate cut in December, there’s a growing risk of a more dovish adjustment sooner.

The British pound dipped 0.1% to 1.3705 versus the dollar, just below last Thursday’s high of 1.3770—the highest level since October 2021. The UK economy grew 0.7% in Q1 2025, the fastest pace in a year, but the Bank of England forecasts slower growth of about 0.25% in Q2.

Asian Market Highlights

In Asia, the Japanese yen strengthened slightly, with USD/JPY falling 0.4% to 144.07, despite weaker-than-expected industrial production growth in May.

The Chinese yuan also gained, with USD/CNY down 0.1% to 7.1654, near its strongest level since November. Recent PMI data showed China’s manufacturing sector contracted at a smaller-than-expected rate in June, while non-manufacturing activity improved. This points to some recovery in business conditions, helped by reduced tariffs following recent U.S.-China trade agreements. However, manufacturing still shrank for the third month in a row, reflecting ongoing pressure from high U.S. tariffs and sluggish domestic demand.

Tesla (NASDAQ:TSLA) has officially begun operating its newest V4 supercharger stations across China, the electric vehicle maker confirmed on Monday. The initial rollout includes locations in Shanghai, Chongqing, Gansu, and Zhejiang provinces.

Tesla plans to extend the V4 supercharger network to more key regions, with Beijing and Guangdong among the upcoming expansion areas. Notably, these high-speed chargers will be open to electric vehicles from other manufacturers, marking a shift toward greater interoperability in China’s EV charging infrastructure.

This launch represents Tesla’s ongoing effort to enhance charging convenience and accelerate electric vehicle adoption across the country.

European equity markets opened higher Monday, buoyed by growing optimism over potential trade agreements as the July 9 deadline for U.S. tariffs approaches. By early trading at 07:05 GMT, Germany’s DAX index had gained 0.5%, France’s CAC 40 edged up 0.2%, and the UK’s FTSE 100 rose modestly by 0.1%.

Trade Optimism Drives Market Confidence

Investor sentiment was lifted following positive cues from Asia-Pacific markets overnight and last week’s confirmation that the U.S. and China finalized a trade agreement reflecting terms agreed upon in Geneva last month. Meanwhile, Canada’s announcement to repeal its Digital Services Tax (DST) paved the way for renewed trade and security talks with the U.S., aiming for a deal by July 21.

Canada’s Finance Minister François-Philippe Champagne confirmed that the government will stop collecting the DST after June 30 and introduce legislation to abolish the tax that primarily targeted major multinational tech companies. Washington had regarded the DST as a key barrier to broader trade negotiations.

Closer to home, sources reported that European Commission President Ursula von der Leyen expressed confidence during a private EU summit that a trade deal with the U.S. could be finalized before the July 9 tariff deadline. Without an agreement, the U.S. plans to impose a 50% tariff on nearly all EU exports, while Europe stands ready with retaliatory measures.

German Retail Sales Highlight Consumer Pressure

Monday’s data revealed a 1.6% drop in German retail sales for May compared to April, underscoring ongoing consumer challenges in Europe’s largest economy amid trade uncertainties. Concurrently, China’s manufacturing sector contracted in June but at a slower pace than anticipated, as exporters grapple with weak global demand and persistent U.S. tariffs.

Japan also reported slower-than-expected factory output growth in May, largely attributed to the impact of American tariffs on automobile imports.

European investors are also awaiting inflation figures from Germany and Italy following a decline in eurozone inflation to 1.9% year-on-year in May, below the European Central Bank’s 2% target. Despite a 25 basis-point rate cut in June, ECB President Christine Lagarde suggested that the easing cycle might be nearing its conclusion.

Corporate Update and Commodity Markets

In corporate news, asset manager Polar Capital (LSE:POLR) announced a 27% rise in core operating profits for the fiscal year ending March 31, driven by a 17% increase in assets under management and higher net management fees.

On the commodity front, crude oil prices slipped amid reduced geopolitical tensions in the Middle East and anticipation of a further output increase by OPEC+ in August. At 03:05 ET, Brent crude futures fell 0.4% to $66.53 per barrel, while U.S. West Texas Intermediate crude declined 0.6% to $65.12 per barrel.

Last week saw both benchmarks record their largest weekly drops since March 2023, though they are poised to close June with over 5% gains for a second consecutive month. OPEC+ members are scheduled to meet on July 6, where another production hike—marking the fifth monthly increase since April—is widely expected.

Gold prices climbed during Asian trading on Monday, recovering from a recent one-month low as the U.S. dollar softened. However, safe-haven demand remained subdued due to easing tensions in the Middle East and hopeful progress on major U.S. trade agreements.

Spot gold increased by 0.5% to $3,290.25 per ounce, while August gold futures rose 0.4% to $3,300.00 per ounce as of 02:00 ET (06:00 GMT). The precious metal had dropped nearly 3% last week, marking its sharpest weekly decline since early May. Despite these losses, gold was on track to finish the month largely unchanged after early gains sparked by geopolitical conflicts were offset by the recent Israel-Iran ceasefire.

Dollar Weakness Supports Gold, Trade Deals Influence Market Sentiment

The ceasefire brokered last week by U.S. President Donald Trump between Israel and Iran eased geopolitical risks, dampening gold’s appeal as a safe haven. On the trade front, optimism was bolstered by a recently signed U.S.-China agreement in Geneva addressing rare-earth exports and reducing some key trade barriers.

Additionally, a U.S.-U.K. trade deal came into effect Monday, cutting car tariffs to 10% and removing duties on aircraft components entirely. Nevertheless, markets remain cautious ahead of the July 9 deadline when tariffs on other trading partners, as well as global steel and aluminum tariffs, may be reinstated.

Gold also benefited from a weaker U.S. dollar, which traders increasingly expect will prompt at least one Federal Reserve rate cut by September. The U.S. Dollar Index dipped 0.2% during Asian hours, hovering near a three-year low.

Other Metals See Mixed Movements; Platinum Poised for Monthly Surge

The decline in the dollar makes gold and other commodities more affordable to buyers using other currencies, driving demand upward. Platinum futures surged 1.9% to $1,377.00 following a recent pullback from a decade-high, positioning the metal for a gain exceeding 30% this month.

Silver futures remained relatively flat, trading around $36.05 per ounce. Copper futures on the London Metal Exchange held steady at $9,888.95 per ton, while U.S. copper futures edged up 0.7% to $5.13 per pound.

Copper gains were limited amid reports that China’s manufacturing sector contracted in June, signaling continued weakness in external demand against the backdrop of ongoing elevated U.S. tariffs impacting the world’s largest copper consumer.

Oil prices declined during Asian trading on Monday as easing geopolitical tensions between Israel and Iran prompted traders to reduce the risk premium. Additionally, expectations of further output increases by OPEC+ put downward pressure on crude.

Brent crude for August delivery fell 0.8% to $67.20 per barrel, while West Texas Intermediate (WTI) crude dropped 1.1% to $64.77 per barrel by 21:44 ET (01:44 GMT). Despite the recent dip, oil prices are still set to rise over 5% this month, driven initially by the conflict between Israel and Iran.

Mixed signals came from China’s latest manufacturing data, with the Purchasing Managers’ Index showing contraction in June, providing only moderate support for oil demand.

Ceasefire Holds, Middle East Supply Risks Ease

Crude prices retreated after sharp gains last week, as the ceasefire between Israel and Iran appeared stable, reducing fears of prolonged supply disruptions in the Middle East. The 12-day conflict had pushed oil close to annual highs, especially following Israeli and U.S. strikes on Iranian nuclear facilities.

The U.S. brokered the ceasefire, and President Donald Trump indicated upcoming nuclear negotiations with Iran, further easing tensions. The ceasefire also quelled concerns over potential Iranian blockades of the Strait of Hormuz, a critical oil shipping route.

OPEC+ Output Increase Expected Ahead of July Meeting

Market attention now turns to OPEC+’s scheduled meeting on July 6, where the group is widely expected to approve a production increase of approximately 411,000 barrels per day for August—consistent with recent monthly hikes.

Earlier this year, OPEC+ began reversing two years of production cuts to counter persistently low prices and discipline members exceeding quotas.

Outside OPEC+, traders are also watching U.S. fuel demand as summer travel season ramps up.

The British pound maintained its position above $1.37 on Monday, following a breakthrough last week, as official data confirmed robust growth in the UK economy during the first quarter of 2025.

At 07:53 GMT, the FTSE 100 index slipped 0.1%, while the pound edged down slightly by 0.07% against the dollar but remained above the $1.37 mark. Meanwhile, Germany’s DAX index gained 0.2%, and France’s CAC 40 fell marginally by 0.05%.

UK Economy Shows Resilience in Q1

Final GDP figures released Monday by the Office for National Statistics revealed that the UK economy expanded by 0.7% quarter-on-quarter in Q1 2025, representing a 1.3% increase year-on-year. Despite the positive momentum, some challenges remain on the horizon.

US-UK Trade Deal Comes Into Effect

The UK government confirmed the activation of a new trade agreement with the United States, aimed at reducing tariffs on British imports. Signed by US President Donald Trump and UK Prime Minister Keir Starmer, this deal signifies a major milestone in transatlantic trade relations.

Regulatory Update: Simplifying Investment Rules

Britain’s financial regulator announced plans to streamline rules for investment firms offering pension and investment services, a move welcomed by the industry that had criticized existing regulations for being overly stringent.

Wood Group Faces Regulatory Probe

In other corporate news, oilfield services company Wood Group disclosed on Friday that it is under investigation by the UK financial watchdog. This follows last year’s announcement of an independent accounting review concerning specific contracts and charges.

Chemring Group (LSE:CHEM) shares rose 1.6% after announcing the acquisition of Landguard Nexus Limited for up to £20 million, enhancing its electronic warfare (EW) capabilities. The deal involves an upfront payment of £14 million in cash, with a potential additional £6 million in earn-outs tied to performance milestones. The acquisition was completed via Chemring’s Roke subsidiary and is expected to strengthen its Cyber and Electromagnetic Activities (CEMA) product portfolio.

Landguard Nexus specializes in the design, manufacture, and support of software-defined radio (SDR) systems, including tracking technologies across satellite, cellular, and radio frequency communications. The current owner-managers are anticipated to stay on with Chemring post-acquisition.

Jefferies analysts described the acquisition as “strategically sensible,” noting that Landguard is part of Chemring’s existing EW supply chain and offers its own market growth opportunities.

This acquisition marks a key strategic step for Chemring to consolidate its supply base, expand technological capabilities, and reinforce its position in the electronic warfare sector.

MS International PLC (LSE:MSI) has delivered record financial results for the year ending April 2025, with pre-tax profits rising to £20.05 million and revenues reaching £117.50 million. The company is increasingly focusing on its Defense and Security division, which now represents 70% of total turnover, driven by rising global defense expenditure. Although international uncertainties and government reviews have impacted some order placements, MS International remains optimistic about its medium- and long-term growth prospects.

The company considered selling some of its non-core divisions but deemed the offers unattractive and decided to continue developing these businesses. A final dividend of 18p per share has been proposed, signaling confidence in the company’s future.

MS International’s strong financial performance is underpinned by robust revenue growth, solid cash flow, and low leverage. While technical indicators show some momentum, the stock appears undervalued, highlighting potential investment appeal. The outlook remains positive, supported by the company’s financial strength and strategic direction, despite mixed technical signals.

About MS International

MS International PLC operates primarily in the defense and security sectors, producing naval weapon systems and land-based counter-drone technology. It also has divisions involved in forgings, petrol station superstructures, and corporate branding, serving markets across the UK, US, and Eastern Europe.

Serica Energy (LSE:SQZ) has confirmed that production has resumed at the Triton FPSO following the completion of planned maintenance and repair work. The company anticipates that production levels will ramp up and stabilize by July, supported by the potential output from two newly drilled wells. The recent maintenance involved essential upgrades and repairs designed to boost the FPSO’s operational efficiency, with no additional downtime expected for the remainder of 2025.

Despite some challenges in financial performance, Serica Energy’s outlook remains positive, underpinned by favorable corporate developments and attractive valuation metrics. While technical indicators reveal strong momentum, investors should remain cautious due to signals of an overbought market.

About Serica Energy

Serica Energy is a UK-based independent oil and gas company focused on exploration and production in the UK Continental Shelf. The company manages a balanced portfolio of oil and gas assets, contributing roughly 5% of the UK’s natural gas supply. Serica’s key operations include the Bruce, Keith, and Rhum fields in the Northern North Sea, with additional interests linked to the Triton FPSO.

AdvancedAdvT Limited (LSE:ADVT) has announced impressive financial results for the year ending 28 February 2025, with revenues reaching £43.3 million and adjusted EBITDA exceeding expectations at £11.3 million. The company’s growth was fueled by strategic acquisitions of Celaton Limited, HFX Limited, and GOSS Technology Limited, which strengthened its SaaS and cloud service portfolio.

Driven by operational enhancements and a revamped go-to-market strategy, AdvancedAdvT achieved a 17.8% pro forma revenue increase alongside a 90% rise in adjusted EBITDA. With a strong cash position, the company is well-equipped to pursue continued expansion through organic growth and further acquisitions, targeting opportunities in AI, automation, and digital transformation sectors.

About AdvancedAdvT Limited

AdvancedAdvT Limited is a global provider of software solutions focused on business operations, compliance, and human capital management. The company leverages AI, data analytics, and business intelligence to facilitate digital transformation and support growth across its target markets.