As the week kicks off, the US Dollar (USD) faces a challenging start, struggling to find demand, while US stock index futures trade in positive territory. The Federal Reserve Bank of Chicago’s National Activity Index for June is the only item on the US economic calendar this Monday. However, all eyes are on the political scene as President Joe Biden announced his withdrawal from the 2024 Presidential election on Sunday.

USD Index and Treasury Yields

After making recovery gains last Thursday and Friday, the USD Index remains under pressure but manages to stay above the 104.00 mark in the European morning. Concurrently, the benchmark 10-year US Treasury bond yield retreats towards 4.2%, losing over 0.5% on the day. This decline comes in the wake of President Biden’s surprising announcement to step down from the race, endorsing Vice President Kamala Harris. In his X post, he stated, “I want to offer my full support and endorsement for Kamala to be the nominee of our party this year. Democrats — it’s time to come together and beat Trump. Let’s do this.”

Chinese Economic Adjustments

In Asia, the People’s Bank of China (PBoC) announced early Monday a reduction in the one-year Loan Prime Rate (LPR) by 10 basis points (bps) from 3.45% to 3.35% and lowered the five-year LPR from 3.95% to 3.85%. The PBoC also cut its interest rate for the 7-day reverse repo to 1.7% from 1.8%. Following these adjustments, the AUD/USD pair, which lost 1.5% last week, continues to decline, trading around 0.6660, down 0.3% on the day.

EUR/USD and GBP/USD Movements

The EUR/USD pair, which experienced losses on Thursday and Friday, closed last week virtually unchanged after bullish movements earlier in the week. The pair remains steady, fluctuating in a narrow channel slightly below 1.0900 during the European morning session.

Meanwhile, GBP/USD shows signs of a modest recovery, trading above 1.2900 at the start of the week following a two-day decline.

USD/JPY Under Pressure

The USD/JPY pair faces significant bearish pressure, dropping towards 156.00 in the late Asian session on Monday. Although it managed to recover slightly, it still shows a loss of more than 0.5% on the day, hovering near 156.60.

Gold’s Performance

Gold, after setting a new all-time high on Tuesday, reversed its direction in the latter half of last week, extending its decline on Friday and losing nearly 2%. Despite this, XAU/USD ended the week slightly above the critical level of $2,400. Early Monday sees the precious metal moving within a tight channel, indicating cautious market sentiment.