Fed Hopes Weigh on Dollar; ALTs Rally, US Stocks Rise

The EUR/USD pair closed the week with minor gains as the US Dollar softened following dovish remarks from Federal Reserve Governor Christopher Waller. His support for a potential July rate cut pressured US Treasury yields lower, fueling demand for the euro. However, stronger-than-expected consumer sentiment data from the US tempered the pair’s upside.

Investors responded positively to Governor Waller’s comments, which signaled openness to a rate cut next month. Waller highlighted a stable labor market but noted weakness in the private sector, expressing a willingness to consider a rate cut—though stopping short of committing ahead of the next Federal Open Market Committee (FOMC) meeting.

Conversely, Chicago Fed President Austan Goolsbee struck a more cautious tone, citing concerns about recent tariff-induced inflation in goods. While Goolsbee remains supportive of eventual policy easing, he emphasized the need for patience if inflation pressures persist.

On the European front, the economic calendar was light. However, ECB policymakers have started laying the groundwork for potential easing. Officials including Mario Centeno, Luis de Guindos, Boris Vujčić, and François Villeroy de Galhau expressed openness to a rate cut, citing growing downside risks to growth. Fabio Panetta echoed similar concerns.

With sentiment tilting dovish on both sides of the Atlantic, markets will be watching closely for confirmation of whether central banks are truly prepared to pivot—or simply keeping options open amid lingering uncertainty.

Bitcoin traded modestly higher in Asian markets on Monday amid cautious optimism following a flurry of U.S. legislative developments aimed at shaping the future of cryptocurrency regulation.

The world’s largest digital asset remains in consolidation mode after retreating from record highs above $123,000 reached last week. Despite the recent pullback, Bitcoin continues to find support near the $119,000 level, though investor sentiment remains measured.

Investor attention last week was firmly on Washington, where lawmakers advanced several key bills during what many dubbed “crypto week.” Most notably, President Donald Trump signed the GENIUS Act into law, establishing the first federal regulatory framework for stablecoins.

The GENIUS Act mandates that stablecoin issuers maintain full reserves in liquid assets such as U.S. dollars or Treasury securities, alongside monthly disclosures—moves widely viewed as a step toward legitimizing the $260 billion stablecoin sector and enhancing integration with the broader financial system.

Meanwhile, the House of Representatives passed two additional bills, The CLARITY Act, which seeks to delineate the roles of the SEC and CFTC in overseeing digital assets, and the Anti-CBDC Surveillance State Act, which would prohibit the Federal Reserve from issuing a central bank digital currency (CBDC) without express Congressional approval.

While the GENIUS Act has been signed into law, its full implementation hinges on extensive rule-making by the U.S. Treasury Department, a process expected to take several months. In addition, the Senate has not yet taken up the other two House-passed bills, leaving questions about the final shape of crypto oversight in the U.S.

While short-term momentum remains positive, investors continue to weigh potential delays in policy implementation and the pace of future regulatory clarity in the U.S.

Oil prices ended slightly lower on Friday, capping a volatile week marked by mixed economic signals from the U.S. and renewed geopolitical tensions in Europe. Concerns over energy supply disruptions persisted after the European Union imposed fresh sanctions on Russia’s oil industry, but market reaction remained muted.

In the U.S., economic data painted a mixed picture. Single-family housing starts fell to an 11-month low in June, as elevated mortgage rates and economic headwinds weighed on residential investment—suggesting potential contraction in the sector for a second consecutive quarter.

On the other hand, consumer sentiment improved in July, with inflation expectations easing further. This could pave the way for the Federal Reserve to begin cutting interest rates, potentially lowering borrowing costs and supporting broader economic activity, including energy demand.

Meanwhile, the European Union finalized its 18th sanctions package against Russia, targeting the country's energy sector in response to the ongoing war in Ukraine. The measures include a ban on petroleum products refined from Russian crude, though imports from countries like Norway, the U.S., and Canada will be exempt.

The US 500 finished with minor losses on Friday, but still secured a weekly gain as investors weighed strong corporate earnings against renewed trade tensions. Reports that President Donald Trump is considering a 15% to 20% tariff on imports from the European Union stirred fresh concerns about a potential escalation in the U.S.-EU trade dispute.

With the August 1 tariff deadline fast approaching, the White House appears to be increasing pressure on EU negotiators to secure more favorable trade terms.

Wall Street also had its attention on corporate earnings, which have broadly outperformed expectations in the early stages of the second-quarter reporting season.

American Express rose after topping profit estimates, thanks to robust spending by affluent cardholders.

Netflix, which surged over 43% this year, reported better-than-expected earnings and raised its full-year revenue guidance. However, shares slipped post-report as results failed to meet lofty analyst expectations.

Looking ahead, next week features a wave of marquee earnings, including Coca-Cola, Texas Instruments, Alphabet, and Tesla.

With inflation cooling and economic risks rising, Federal Reserve Governor Christopher Waller said on Thursday that a rate cut could be warranted as early as the central bank’s next meeting.