Currency & Commodity Analysis:

US Dollar Index

The US dollar index fell more than 0.5% on Tuesday to around 100.70, as lower-than-expected US inflation data reduced market expectations for a Federal Reserve rate hike. The annual consumer inflation rate slowed to 3.5% in June from 4.2% in May, below the forecast of 3.8%, with declining energy prices helping to ease overall price pressures. Core inflation also fell to 2.6%, while monthly consumer prices declined by 0.4%, the first monthly decline since 2020. These figures offset recent hawkish comments from Federal Reserve Chairman Kevin Warsh, who reiterated the central bank's commitment to restoring price stability and emphasized that policymakers have no tolerance for persistently high inflation. Meanwhile, renewed geopolitical tensions limited the dollar's decline as the interim peace agreement between the US and Iran collapsed. The US resumed strikes against Iran and reimposed a naval blockade, while Tehran launched new attacks on shipping through the Strait of Hormuz, reigniting concerns about global energy supplies.

After the dollar index climbed back above 100, the core driver was not the growth narrative, but rather the renewed widening of interest rate differentials. The latest economic forecasts place a median interest rate of 3.8% at the end of 2026, higher than the current midpoint of 3.625%. The interest rate futures curve currently points to near 4% by year-end, retaining a significant probability of further tightening over the next 12 months. This explains why the dollar index has been able to hold near 100 despite fluctuating risk sentiment. The real support is not its absolute safe-haven attribute, but rather the cash interest rate differential and expectations of real interest rates. As long as short-term yields do not decline significantly, a dollar pullback is more likely to manifest as consolidation at higher levels rather than a trend reversal. Therefore, on the upside, watch the 101.80 (June 24 high) and 102.00 (psychological level) areas; on the downside, watch the 100.60 (last week's low) and 100.00 (psychological support level).

Today, consider shorting the US Dollar Index at 101.05, with a stop loss at 101.15 and targets of 100.60 and 100.50.

WTI Crude Oil

US President Trump's announcement of restoring the naval blockade against Iran and imposing a 20% fee on cargo transported through the Strait of Hormuz has escalated geopolitical tensions and strengthened expectations of a Fed rate hike, putting downward pressure on gold prices. Affected by this, oil prices surged by over 9%, with US crude oil currently trading around $79 per barrel on Tuesday, and may test above $80 per barrel during the day. WTI crude oil prices jumped more than 9% on Monday, with both major oil benchmarks hitting one-month highs. Brent crude rose 9.44% to $83.16 a barrel, the largest single-day gain since April 2, while WTI crude rose 9.08% to $78 a barrel, the largest single-day gain since April 29. This surge was influenced by the US announcement that it would impose a maritime blockade on Iran's entire coastline, ports, oil terminals, and all vessels (regardless of flag) starting July 14, and impose a 20% fee on cargo transport through the Strait of Hormuz, which had previously been reinstated.

In summary, Trump's announcement of restoring the maritime blockade against Iran and the planned 20% fee on cargo transport through the Strait of Hormuz marks a new phase in the US-Iran conflict—expanding from purely military confrontation to economic pressure. Iran's strong response and escalating military actions indicate that the two sides are unlikely to return to the negotiating table in the short term. The daily stochastic oscillator has turned upwards from the 35 range; Straits Times clearance is only one-third of normal; reserves previously used to stabilize soaring oil prices have fallen to a 43-year low. A pullback to around $72.53 presents a buying opportunity; only a daily close below this level would risk breaching the $70 psychological barrier again. The first key psychological resistance level is $60.00, followed by the 45-day moving average at $82.90. Since the sharp decline in oil prices from $107.35 in May, both moving averages are currently trending downwards. Regarding support levels, Tuesday's low of $77.69 is a key short-term support; holding this level is crucial for maintaining oil prices above $80.00; a break below this level would target the 200-day moving average at $73.58, which is likely to be tested if the situation truly eases.

Today, consider going long on crude oil at 79.25, with a stop loss at 79.10 and targets of 80.80 and 81.00.

Spot Gold

On the morning of July 14th, spot gold briefly fell below the $4,000/ounce mark, trading around $3,965/ounce, after earlier hitting a low of $3,983. US President Trump's announcement of restoring the naval blockade against Iran and imposing a 20% fee on cargo transport in the Strait of Hormuz exacerbated geopolitical tensions and strengthened expectations of a Fed rate hike, putting downward pressure on gold prices. Data from the Chicago Mercantile Exchange shows that traders now expect a 75% probability of a September rate hike, putting pressure on gold, a non-interest-bearing asset. Analysts warn that if oil prices continue to rise, gold prices could fall further towards $3,800 or even $3,500. This week, the market will closely watch key US data such as the June Consumer Price Index, Producer Price Index, retail sales, and initial jobless claims to assess inflation and consumption levels. This trend contrasts sharply with the previous pattern of gold prices fluctuating at high levels. The core driving factor behind this is the sharp escalation of the situation in the Middle East, particularly the US's reinstatement of the naval blockade against Iran, which has directly ignited concerns in the global energy market and has spilled over into monetary policy expectations.

In summary, this round of gold price declines is a result of the resonance between geopolitical events and monetary policy expectations. In the short term, with the release of US inflation data this week, if CPI and PPI show a significant transmission effect from oil prices, expectations of interest rate hikes may further intensify, and gold prices will continue to face downward pressure. Technically, gold prices have broken below the recent trading range, with the area around $3.941.70, near the low of late June, becoming a key support level. A break below this level would open up further downside potential. Currently, gold prices are trading below the 9-day simple moving average of $4108, with bears holding the upper hand in the short term, and gold prices are testing the breakout zone of a symmetrical triangle pattern. Bullish Targets: Gold prices need to hold above $4,000 (a psychological level) and $3.941.70 (the low at the end of June); a continued upward move would target the 9-day simple moving average at $4,108, with a further target of $4,138 (the 25-day simple moving average). Bearish Targets: A break below $4,000 would target a deeper decline to $3.941.70 (the low at the end of June), followed by $3,900 (a psychological level).

Consider going long on gold today at 4.045, with a stop-loss at 4,040 and targets at 4,090 and 4.110.

AUD/USD

On Tuesday, the AUD/USD pair was around 0.6970. Continued geopolitical tensions in the Middle East continued to boost safe-haven currencies such as the US dollar, which performed strongly relative to the Australian dollar. The US announced a new round of strikes against Iran on Monday, hours after US President Donald Trump stated that Washington was "reinstating" the blockade of the Strait of Hormuz and would charge other ships a safe passage fee. According to Reuters, earlier on Tuesday, the United Arab Emirates (UAE) Ministry of Defense stated that two state-owned oil tankers were attacked by two Iranian cruise missiles in the southern channel of the Strait of Hormuz, within Omani territorial waters. Signs of escalating tensions in the Middle East could support the US dollar as a safe-haven asset and put downward pressure on the Australian dollar pair. With inflation risks persisting and further interest rate hikes still under consideration, the bank predicts the Reserve Bank of Australia (RBA) may raise the cash rate again as early as August. The RBA has already implemented three 25-basis-point rate hikes so far this year, raising the official cash rate (OCR) to 4.35%.

For the Australian dollar, the deteriorating situation in the Middle East will negatively impact the currency through two channels: firstly, a general decline in global risk appetite has led investors to reduce their holdings of risk currencies and increase their holdings of safe-haven assets; secondly, tensions in the Strait of Hormuz are pushing up energy prices, which could drag down the global economic growth outlook, and Australia, as a resource-exporting economy, is highly sensitive to global growth expectations. Looking ahead, the Australian dollar against the US dollar is likely to fluctuate within the 0.6900-0.6980 range in the short term, with its direction depending on the evolution of two key variables. On the upside, if there are signs of easing tensions in the Middle East, a recovery in risk appetite could push the Australian dollar back to 0.7050 or even 0.7000. If Australian inflation data exceeds expectations, increasing the probability of an August rate hike, the Australian dollar could also receive independent policy support. On the downside, if the US-Iran conflict continues to escalate, further deterioration in risk appetite could push the Australian dollar to test the 0.6900 or even 0.6879 (200-day moving average) area.

Today, consider going long on the Australian dollar at 0.6960, with a stop loss at 0.6950 and targets at 0.7010 and 0.7020.

GBP/USD

GBP/USD traded in positive territory around 1.3380 during Tuesday's trading session. However, given concerns about escalating US-Iran conflict, the potential upside for this major currency pair may be limited. According to Reuters, US President Trump said on Monday that Washington is reinstating its maritime blockade of Tehran and will charge a fee while keeping the Strait of Hormuz open, following a new round of missile and drone attacks between the two sides. Meanwhile, Iran's Islamic Revolutionary Guard Corps (IRGC) said on Tuesday that cooperation with an "aggressive enemy" in the Strait of Hormuz would delay the reopening of the waterway and trigger a global energy crisis. Concerns about escalating US-Iran tensions could boost safe-haven currencies such as the US dollar and limit the upside potential of the pound/dollar exchange rate. Traders are increasing bets that the Bank of England will be forced to raise interest rates this year to control inflation. Bank of England Chief Economist Hugh Peel said interest rates are likely to rise this year to prevent inflation from becoming entrenched.

The anticipated improvement in the UK political situation and the possibility of further tightening by the Bank of England have provided some fundamental support for the pound. However, safe-haven demand stemming from the escalating US-Iran conflict, rising international oil prices, and expectations of higher interest rates from the Federal Reserve remain important factors supporting the US dollar, limiting the upside potential of the pound against the dollar. Technically, the pound/dollar pair maintains a slightly bullish daily chart pattern, with the price retracing but still trading near the medium- to long-term moving averages, indicating that the bullish trend has not been significantly disrupted. While the MACD histogram has shortened somewhat, the lines remain above the zero line, suggesting that medium-term upward momentum remains. The RSI has fallen back to the neutral-to-strong zone, reflecting a slight cooling of short-term bullish momentum. If the price regains a foothold above the 1.3397 (200-day simple moving average) and 1.3400 (psychological level), it could potentially challenge the June 15 high of 1.3460 again. The key resistance level is 1.3500; below, the key support level to watch is the 30-day simple moving average at 1.3327. A break below this level could lead to a further decline to around 1.3300.

Consider going long on GBP/JPY today at 1.3375, with a stop-loss at 1.3363 and targets at 1.3430 and 1.3440.

USD/JPY

On Tuesday, USD/JPY was trading above 162. The pair rose to around 162.48 earlier in the week before retreating due to comments from the Japanese government regarding pension fund allocation. Meanwhile, the Middle East conflict caused Brent crude oil to rise to $79.78 per barrel intraday, with energy input costs and safe-haven demand simultaneously impacting yen pricing. Japanese Finance Minister Satsuki Katayama proposed increasing the allocation of the Government Pension Investment Fund (GPIF) to domestic financial assets. The impact on foreign exchange depends on the source of funds. If funds sell unhedged overseas assets and convert them back into yen, it will create direct demand for foreign exchange. However, if the increase comes from cash, maturing funds, or already hedged assets, the exchange rate effect will be much weaker. Therefore, the speech can only change expectations initially; the lasting impact depends on the scale of implementation, asset classes, and methods of currency exchange. The repatriation of overseas assets can increase demand for yen, but concentrated purchases of Japanese government bonds may lower long-term yields, weakening the support for the yen from narrowing interest rate differentials. The same policy has both a positive effect on capital flows and a negative effect on yields, and cannot be simply equated with a unilateral strengthening of the yen.

Currently, the exchange rate of 162.30 remains above the Bollinger Band midline of 161.85. The previous high of 162.84 is close to the upper band of 162.90, indicating that 162.84 to 163.00 is a high-volatility zone; the recent low of 160.49 serves as a reference point for the lower structure. The MACD technical indicator shows that the medium-term upward structure has not been broken, but the marginal momentum has weakened compared to the previous period. The current state is closer to high-level consolidation than sustained acceleration. Overall, USD/JPY is currently in a strong phase. If it can effectively break through the previous high of 162.84 and further test the psychological level of 163, the bullish momentum may strengthen again, and the exchange rate is expected to continue its push towards the resistance around 163.50-164.00. On the downside, if the exchange rate fails to break through and instead falls back, the first support levels to watch are 162.00 (psychological level) and 161.85 (20-day moving average), followed by the psychological level of 161.00.

Today, consider shorting USD at 162.42, with a stop loss at 162.60 and targets at 161.70 and 161.80.

EUR/USD

EUR/USD recorded modest gains during Tuesday's trading session, approaching 1.1420. However, given the renewed escalation of US military action against Iran, the potential upside for this major currency pair may be limited. US President Trump announced on Monday that the US would reinstate a blockade of Iranian maritime traffic and impose a 20% toll on all goods transported through the Strait of Hormuz. The US military has resumed strikes against Iran, including attacks on the port city of Bandar Abbas, as well as the islands of Qeshm and Kish. In response, Iran attacked two UAE oil tankers, the Mombasa and Al Bahia. Escalating tensions in the Middle East could boost safe-haven currencies such as the US dollar, creating resistance for the major currency pair in the short term. Milder inflation data will delay the possibility of a US interest rate hike and weaken the dollar's performance against the euro.

The escalating tensions in the Middle East and rising international oil prices continue to put pressure on the euro but provide support for the dollar. Technical analysis suggests that bearish momentum has weakened, and the exchange rate may enter a short-term consolidation phase. The euro is trading around 1.1420 against the dollar, maintaining a short-term bearish pattern as the spot price remains below the 25-day simple moving average of 1.1448. The 14-day Relative Strength Index (RSI) hovers around 39, suggesting continued but not extreme downward momentum. On the upside, initial resistance is at the 25-day simple moving average of 1.1448, followed by psychological resistance at 1.1500. If the rebound continues, the top of the channel around 1.1530 will become a stronger resistance level. As for the main support levels on the downside, the first is the June 24 low of 1.1324, followed by the psychological level of 1.1300.

Today, consider going long on the Euro at 1.1410, with a stop loss at 1.1400 and targets at 1.1440 and 1.1450.

Stock Analysis:

Australian ASX 200 Stock Index

Basic Market Overview:

The Australian Securities Exchange (ASX) 200 index closed flat at 8,808 points on Tuesday, marking the second uneventful trading day for traders amid escalating tensions in the Middle East. The US launched its third night of airstrikes against Iran, and two oil tankers were attacked in the Strait of Hormuz after Washington reinstated its blockade of Iranian shipping. Domestic data showed that Australian consumer confidence rebounded in July, but remained one of the weakest readings in the survey's 50-year history, highlighting vulnerability to global shocks. However, business confidence climbed to a four-month high in June. In China, a major trading partner, record June trade data set the stage for second-quarter GDP figures to be released on Wednesday.

Logistics, technology, and utilities sectors declined, but gains in energy, consumer services, and healthcare sectors offset these losses. Rio Tinto fell 0.3% ahead of production results, and the Big Four banks fell 0.9% to 1.5%. Nextdc, Pro Medicus, and Qantas also saw declines. Comparatively, BHP Billiton rose 0.9%, Woodsside rose 3.3%, and Santos rose 1.3%.

Sector Performance:

Leading Sectors (from strongest to weakest):

1. Energy +1.98% (strongest performer)

Driven by: A sharp rise in crude oil prices overnight, with market concerns about shipping risks in the Strait of Hormuz.

Key Stocks: Woodside Energy (WDS) +3.0%, Santos (STO) +1.3%, Ampol slightly higher.

2. Utilities +1.37% Defensive funds flowed in, leading to a rebound in hydropower and power grid stocks.

3. Materials +0.67% Iron ore returned above $100, with BHP and Fortescue closing slightly higher; the gold sub-sector showed mixed performance.

Leading Declining Sectors (Top Losers)

1. Real Estate Investment Trusts (REITs) -1.62% (Worst performing sector) High interest rate expectations led to a sell-off in the high-interest-rate-sensitive real estate sector.

2. Consumer Staples -0.81%

3. Financials -0.54% The four major banks collectively weakened (declining by 0.4% to 1.0%), suppressing the index.

Technical Analysis:

The ASX200 index maintained a high-level range-bound movement (8700–8915 range) on the daily chart. The range has narrowed for two consecutive trading days, indicating consolidation. No clear unilateral trend is expected until a breakout occurs. Sector performance is highly divergent: the energy sector surged 2% (Middle East tensions pushed up oil prices, leading to strength in WDS and Santos); banks, real estate, and technology weakened; the resources sector fluctuated slightly, with the balance of power between bulls and bears causing the index to trade sideways. Geopolitical tensions in the Strait of Hormuz pushed up oil prices, but increased global inflation expectations suppressed growth stocks; the market awaited China's Q2 GDP data on Wednesday (Australia's commodity demand is highly dependent on China). Moving average structure: The index is trading near the 20-day moving average, with the moving averages converging, indicating an unclear direction; if it effectively holds above the 20-day moving average, the bulls will have a chance to restart; a break below would open up downside potential. The RSI (14): in the neutral range of 46-52, is neither overbought nor oversold, showing clear signs of a volatile market. The market has entered a wait-and-see period, with upward momentum continuing to narrow. Institutional funds have begun structural portfolio adjustments, and the index is still more than 4% lower than its February high for the year.

Trading Strategy:

The following are technical trading ideas only and do not constitute investment advice. Leveraged trading may result in losses exceeding the principal.

Long Position Conditions:

Price retraces to the 8770-8780 support range and stabilizes; hourly chart shows a bullish candle.

• Entry Range: 8775-8790

• Stop Loss: 8755 (Strict stop loss if below this level)

• First Take Profit: 8835; Second Take Profit: 8875

Profit/Loss Ratio ≥ 2:1; Reduce position in batches upon reaching take profit.

Short Position Conditions:

Rebound to 8830-8840 resistance and encounters resistance; hourly chart shows downward pressure.

• Entry Range: 8825-8840

• Stop Loss: 8865

• First Take Profit: 8785; Second Take Profit: 8770

Key Risk Warnings:

External Unexpected Events: Further escalation of the Middle East conflict (positive for energy, negative for risk assets); or a rapid decline in oil prices due to easing tensions.

Wednesday's Chinese GDP data: Strong data boosted Australian resource stocks, while weaker-than-expected data directly pressured the ASX200.

Overnight US stock market performance: Nasdaq volatility will impact the Australian technology sector.

Leveraged trading strictly prohibits holding losing positions; avoid frequent adding to positions during narrow trading ranges.

Hong Kong Hang Seng Index

Basic Market Overview:

The Nikkei 225 fell 1.5% to around 67,500 points, while the broader Topix index fell 0.2% to 4,026 points, as Japanese stocks were pressured by escalating tensions in the Middle East, with inflationary pressures and interest rate hike expectations remaining a focus. The US and Iran exchanged new missile launches over the weekend, pushing up oil prices amid ongoing shipping disputes in the Strait of Hormuz. Investors are also awaiting a wave of corporate earnings reports this week, a key test of whether the AI-driven market rally can be supported by strong corporate results.

In terms of individual stocks, Kioxia Holdings fell 1.8%, Taiyo Yuden fell 4.8%, and Yaskawa Electric fell 14.2%, while SUMCO rose 7.9%, SoftBank Group rose 2%, and Mitsubishi UFJ rose 2.4%.

Sector Performance:

Leading Sector Trend Analysis

Technology Leaders: With the iteration of AI big data models and the optimization of the competitive landscape of internet platforms, some cash-rich technology giants are showing signs of valuation repair and often rebound first when the market stabilizes.

High Dividend Sectors: In a market environment of increased uncertainty, high-dividend sectors such as energy, telecommunications, and large banks remain safe havens for risk-averse funds, providing relatively stable return expectations.

Domestic Consumption: With the continued implementation of consumption promotion policies in various regions, catering, tourism, and discretionary consumer stocks have recently shown strong resilience and catch-up demand, driven by expectations of a fundamental recovery.

Risk Warnings for Leading Declining Sectors

Real Estate and Related Industries: Despite frequent policy announcements, sales data recovery will take time, and market sentiment remains cautious. Real estate stocks are susceptible to pullbacks due to market volatility.

Some Overvalued Pharmaceutical Stocks: With centralized procurement becoming the norm in the industry, some biopharmaceutical stocks that have seen significant gains in the past and lack breakthroughs in R&D face valuation pullback pressure during the earnings season.

Offshore Financial Related Sectors: If US Treasury yields continue to rise, financial derivatives and non-bank financial sectors, which are highly sensitive to interest rates, will often be under the heaviest pressure. Investors should avoid short-term volatility in these areas.

Technical Analysis:

The Hang Seng Index rebounded today, closing up 0.52% at 24,340.73 points, forming a bullish candlestick with a long lower shadow, indicating strong support. Technically, the market shows a slightly bullish trend. Short-term focus should be on the key resistance level of 24,500 points and the support level of 23,900 points. Key sectors to watch include PCB, non-ferrous metals, and gold. Today's candlestick pattern, a bullish candle with a long lower shadow, is a typical bottoming-out and rebound formation, indicating strong support below. The index found strong support around 23,900 points, successfully holding above the lower edge of the recent trading range. Overall, it remains within the 24,000-24,500 point range, showing signs of an upward breakout. The index has risen above the 5-day, 10-day, and 20-day moving averages, with short-term moving averages in a bullish alignment, strengthening support. The RSI (14-day) is around 56-58, in a neutral-to-strong range, not yet overbought. The MACD is above the zero line, with slightly enlarging red bars, indicating continued bullish momentum and no obvious divergence. In terms of trading volume, the afternoon rebound was accompanied by increased volume, showing stronger buying power and increased willingness to enter the market.

Trading Strategies:

Bull Strategy

1. If the price retraces to around 24100 and stabilizes without breaking below 23900, a small long position can be considered; the initial target is 24440, with a further target of 24600 if it breaks through.

2. Stop-loss: Exit if the price breaks below 23900.

3. Stock selection priority: PCB hardware, leading oil and gas companies, and undervalued cyclical non-ferrous metals; avoid AI application stocks that have already seen profit-taking at high levels.

Bear Strategy

1. If the price encounters resistance in the 24400-24600 range with insufficient volume, a pullback can be considered.

2. The initial target is 24100, with a further target of 23900 if it breaks below.

3. Stop-loss: Exit if the price holds above 24600.

Risk Warnings:

Geopolitical Risks: The Trump administration's reinstatement of the shipping blockade against Iran, escalating tensions in the Middle East, could trigger global market volatility.

US Stock Market Volatility Risks: Overnight declines in US stocks, if followed by continued weakness, will drag down Hong Kong stock performance.

Economic Data Risks: The release of China's June trade data, if weaker than expected, could impact market sentiment.

Disclaimer: The information contained herein (1) is proprietary to BCR and/or its content providers; (2) may not be copied or distributed; (3) is not warranted to be accurate, complete or timely; and, (4) does not constitute advice or a recommendation by BCR or its content providers in respect of the investment in financial instruments. Neither BCR or its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.