The US dollar index has dropped 10.8% in the first half of 2025, marking the worst performance for the period since 1973. Uncertainty surrounding US President Donald Trump's trade and tariff policies, as well as his push for Federal Reserve rate cuts, have contributed to the decline.

The European Union is reportedly open to a US trade deal involving a 10% universal tariff, but wants lower rates for key sectors such as pharmaceuticals, alcohol, semiconductors and commercial aircraft. The EU is also seeking quotas and exemptions to reduce the impact of US tariffs on automobiles, steel, and aluminum, sources say. The EU has until July 9 to reach an agreement with President Donald Trump before tariffs on nearly all EU exports to the US increase to 50%.

Hong Kong's Hang Seng index has surged 20% this year, marking its strongest outperformance against mainland Chinese equities since 2008. This bull run is fueled by record investment flows from mainland China, particularly into technology companies like Alibaba and Tencent that are not listed on the mainland.

Japan's latest 10-year government bond auction drew robust demand, with a bid-to-cover ratio of 3.51, exceeding the 12-month average. Attention now shifts to Japan's upcoming 30-year bond auction scheduled for Thursday, which is seen as a critical test of investor appetite for super-long maturities.

European Central Bank Governing Council member Gediminas Simkus says the inflation outlook is fragile because of volatility in the commodities and foreign exchange markets. While the ECB has met its inflation target, Simkus notes that the rapid strengthening of the euro and energy price fluctuations pose risks, with a greater chance of undershooting the 2% target.

Goldman Sachs expects the Federal Reserve to implement three interest rate cuts this year, citing weaker labor market conditions and muted effects from tariffs. The bank anticipates the Fed will make three consecutive quarter-point cuts in September, October and December, rather than just one in December as previously forecast.

The Malaysian ringgit has reached a nine-month high against the US dollar, driven by foreign bond inflows and a weaker dollar. The ringgit rose as much as 0.7% to 4.1805 per dollar, bolstered by $2.9 billion in bond inflows in May, according to Bank Negara Malaysia.

The European Union T+1 Industry Committee has urged financial firms to invest in automation to prepare for the transition to a one-day securities settlement regime in 2027, highlighting the need to eliminate manual processes to avoid bottlenecks. The shift, which will align the EU with the US, is expected to be more complex due to the fragmented nature of the European market.

China has raised the quota for the Qualified Domestic Institutional Investor program to $170.9 billion, marking the first increase since May 2024. The move is expected to ease capital outflow controls as depreciation pressure on the yuan has subsided and demand for foreign assets has decreased. The quota increase includes $2.1 billion for securities firms and fund houses, $660 million for banks and $300 million for insurers.

The European Union is preparing to launch a comprehensive quantum computing strategy aimed at consolidating funding, expertise, and resources across member states. The initiative seeks to build a robust quantum technology ecosystem, positioning Europe as a global leader in the field.

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