- June 26, 2025
- Posted by: Melanie Scott
- Category: Market News
The USD took a 0.71% tumble against the CAD today, driven by rising expectations for Federal Reserve rate cuts and fresh political uncertainty. President Trump, speaking from the NATO summit in The Hague, reignited concerns over the Fed’s independence by hinting that he may appoint a replacement for Jerome Powell by autumn. The NATO summit itself was notable, with the alliance pledging to lift defense spending targets from 3.4% (U.S.) and 2% (the rest of NATO) to 5% of GDP over the next decade.
The US economy continues to show signs of strain. Final GDP between January and March contracted by 0.5% quarter-over-quarter, a downgrade from the previous -0.2% forecast, as ongoing trade tensions under President Trump’s administration disrupted business activity. The decline was largely attributed to businesses front-loading imports ahead of impending tariff hikes, hurting domestic growth figures. On the bright side US unemployment claims came in at 236K, better than both the forecast of 244K and the previous week’s 246K. Core durable goods orders also surprised to the upside, rising 0.5% month-over-month against an expected and prior 0.1% increase. Pending home sales saw a healthy rebound, jumping 1.8% in May versus a modest 0.2% expectation and sharply improving from April’s -6.3%.
The EUR has finally eased after an impressive near two-week run against the Canadian dollar, touching a 7-year high this morning before retreating 0.19% from yesterday’s close. Despite today’s pullback against CAD, the EUR continues to gain ground versus the USD, trading at levels last seen in September 2021. ECB President Christine Lagarde spoke this afternoon at the 150th Anniversary of the Munich Opera Festival, warning of rising economic fragmentation, citing renewed trade tensions, geopolitical risks, and slower global growth. She urged deeper European integration to safeguard prosperity and highlighted that the ECB has cut its deposit rate from 4% (May 2024) to 2% (June 2025) and lowered key interest rates by 25 bps to 2.15%, in a data‑driven effort to steer inflation toward the 2% target. Market reactions remained muted following her remarks.
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