Last week, PMIs were released for various countries.
France was no good, Germany did well, and Europe as a whole did better than expected. Manufacturing numbers were poor, but is fiscal expansion having an effect on the economy?
The PMI for the U.K. was not so good. Fiscal concerns are growing, and it seems likely that at some point there will be another fiscal-caused rise in very long-term interest rates.
If that happens, the euro-pound will have a good deal of room to rise.

The U.S. PMI was largely in line with market expectations. The focus has shifted to employment, with the U.S. jobs report on the 3rd of next month being the most important.
The euro has been on the receiving end of investors who want to avoid U.S. unipolarity, but President Trump’s change in stance could be a turning point in the Ukraine situation, which would be negative for the euro in the short term.
IFO numbers also worsened, but German exporters should not be optimistic about their performance given the impact of Trump tariffs.
The dollar rose amid no particular news. The move was a break above the range, which is often more genuine in the absence of material.

Long-term U.S. interest rates are slowly rising, and the FOMC has entered a rate-cutting phase, but Chairman Powell is not clearly dovish, which has drawn the ire of Treasury Secretary Bessent.
The government shutdown is approaching, but the U.S. fiscal situation is not optimistic. The rise in long-term U.S. interest rates appears to be deeply rooted as it is from a supply and demand perspective. Rising interest rates no longer = rising dollar.

The dollar rallied unilaterally due to strong U.S. GDP, but the impact of rush demand before tariffs is also significant, and the U.S. economy may not necessarily be strong in the second half of this year, so it will be difficult to see a strong dollar/yen rally.
We expect a slow rise in the dollar-yen. Eurodollar is likely to recover the 1.17 level.

Gold is steady at its all-time high at $3,760, above its previous high. Countries in what is known as the Global South have been buying gold as an alternative to purchasing dollars as foreign currency reserves.
Essentially, they want to sell the dollar and buy euros and yen as an antithesis to Trump’s policies, but since currencies are also used for trade, there are limits to how far the dollar can fall and relative currencies can rise, but there are no limits to commodities. Long gold is probably the right answer in the current world situation.

If gold rises, the euro-dollar will also rise. The dollar will eventually fall as well.