U.S. GDP, Jobless Claims, Pending Home Sales

The euro surged to levels not seen since late 2021, lifted by a weaker US dollar amid easing Middle East tensions and growing expectations of Federal Reserve rate cuts.  A de-escalation in tensions between Iran and Israel, combined with increasing market speculation that the Federal Reserve could begin easing monetary policy later this year, weighed on the US dollar.

Federal Reserve Chair Jerome Powell testified before the US Senate, emphasizing the uncertainty around the inflationary impact of new tariffs. “The question is, who’s going to pay for the tariffs? How much of it does show up in inflation? And honestly, it’s very hard to predict that in advance,” Powell stated, reinforcing the Fed’s cautious stance on policy direction. Boston Fed President Susan Collins echoed Powell's message, noting that monetary policy remains appropriately positioned but acknowledged that tariffs could lead to higher prices and slower economic growth in the months ahead.

Economic data from the US continued to show signs of strain. New Home Sales plunged 13.7% in May, falling to an annualized pace of 623,000 units—well below the forecast of 693,000.

Across the Eurozone, Wednesday’s economic releases painted a mixed picture. French Consumer Confidence remained unchanged at 88 in June, missing expectations of a slight improvement. Meanwhile, Spain’s Q1 GDP growth was confirmed at 0.6% quarter-on-quarter and 2.8% year-on-year, in line with initial estimates.

Looking ahead, market participants will turn their attention to upcoming speeches from European Central Bank (ECB) officials Luis de Guindos and Isabel Schnabel, as well as the GfK Consumer Confidence Index for July. On the US side, traders await the final Q1 GDP reading, Durable Goods Orders, and remarks from Fed officials including Cleveland Fed’s Beth Hammack, Governor Michael Barr, and Minneapolis Fed’s Neel Kashkari.

Bitcoin edged higher on Wednesday, buoyed by continued risk-on sentiment as the Israel-Iran ceasefire held firm.

The broader crypto market showed mixed performance, with altcoins lagging behind Bitcoin despite an improved risk environment. Attention has now turned to signs of deepening institutional interest in Bitcoin, which could provide further price support in the coming weeks.

Bitcoin saw a notable uptick in institutional investment this week. ProCap BTC, led by crypto investor Anthony Pompliano, reportedly acquired nearly $400 million in Bitcoin following a $1 billion public listing deal via a special-purpose acquisition company (SPAC).

In Asia, Japanese hotel operator Metaplanet made headlines by purchasing approximately $133 million in Bitcoin, positioning itself as the fifth-largest corporate holder of the cryptocurrency—trailing only high-profile companies such as Tesla.

Institutional sentiment received a further boost after a key regulatory development in the United States. William Pulte, Director of Federal Housing, announced that government-backed mortgage giants Fannie Mae and Freddie Mac would begin evaluating the use of cryptocurrency as a qualifying asset in mortgage applications.

While details remain unclear—such as which cryptocurrencies may be included and how volatility risks will be managed—the move marks a potentially historic shift in the integration of digital assets into mainstream financial services.

Oil prices remained almost unchanged on Wednesday as U.S. inventory data pointed to stronger-than-expected demand and as markets assessed the tentative stability of the ceasefire between Iran and Israel.

The sharp selloff in oil earlier this week followed an announcement by U.S. President Donald Trump confirming a ceasefire between Iran and Israel. That development eased immediate fears of supply disruptions in the Middle East, leading Brent to settle at its lowest since June 10 and WTI at its lowest since June 5.

The recent rally in oil prices was initially sparked by heightened geopolitical tensions after Israel’s surprise attack on Iranian military and nuclear facilities on June 13, followed by U.S. strikes on Iranian nuclear infrastructure over the weekend. Prices briefly surged to five-month highs before reversing as diplomatic efforts took hold.

The Energy Information Administration (EIA) reported that crude oil inventories fell by 5.8 million barrels last week, far exceeding analysts’ expectations for a draw of just 797,000 barrels.

A slate of U.S. macroeconomic data released overnight, including softer consumer confidence readings, pointed to a possible slowdown in the world’s largest economy.

U.S. stocks ended mixed on Wednesday, with the US 500 edging slightly higher but remaining just below record highs as Wall Street digested geopolitical developments in the Middle East and closely parsed comments from Federal Reserve Chair Jerome Powell.

Geopolitical tensions continued to ease after a ceasefire between Israel and Iran appeared to hold for a second consecutive day. The truce, brokered by U.S. President Donald Trump, ended nearly two weeks of aerial conflict between the regional rivals.

Although Trump previously ordered airstrikes on Iranian nuclear infrastructure—declaring them “completely destroyed” via social media—questions lingered over the long-term impact of those strikes.

Separately, NATO leaders reached an agreement to raise defense spending to 5% of GDP by 2035—a move seen as a foreign policy win for the Trump administration following pressure on allies to boost military outlays.

Federal Reserve Chair Jerome Powell returned to Capitol Hill for a second day of testimony, emphasizing caution in the face of tariff-driven inflation. Powell said the Fed must manage the risk that higher import tariffs could stoke persistent inflation, even if the effect proves temporary.

Economic data released earlier in the week showed U.S. consumer confidence falling more than expected in June, highlighting growing unease about inflation and trade policies, despite resilient job gains and low unemployment. Investors will next turn their attention to May new home sales figures for further clues on the economic outlook.

In corporate news, FedEx dropped following disappointing earnings forecast that fell short of analyst expectations, adding to concerns about global trade and logistics demand. NVIDIA hit a new record high as Loop Capital raised its price target to $250, citing sustained demand for AI chips and accelerated enterprise adoption.