Market Analysis for 23rd June 2025
BY TIOmarkets
|June 23, 2025As we start a new trading week, traders should adapt their strategies to the delicate balance currently fueling market movements. There is optimism through central bank stability, caution driven by geopolitical tensions, as well as economic uncertainties.
Here’s a detailed look at what’s been driving the forex, indices, and commodities markets over the past week. So you can prepare for the trading opportunities ahead.
Forex Markets: Dollar Strength Amid Central Bank Caution
The US dollar was the standout performer in the forex market last week, gaining ground against most major currencies. In contrast, the Canadian dollar and the Japanese Yen lagged, making them the two weakest currencies among the majors. Despite this divergence, overall volatility in the forex market has remained relatively low.
The Federal Reserve’s decision last Wednesday to hold the Federal Funds Rates steady at 4.50% has lent support to the dollar, reinforcing its appeal as a “safe-haven” asset. The Bank of England and the Bank of Japan also decided to maintain their key interest rates at 4.25% and 0.50% respectively last week. Meanwhile, more dovish signals from the European Central Bank and the Bank of England have exerted some downward pressure on the euro and the pound.
Looking ahead, traders should remain vigilant to key events that could further sway currency markets. These include Fed Chair Jerome Powell’s upcoming testimony, the US Core Personal Consumption Expenditures (PCE) Price Index, and GDP figures. Additionally, inflation data from Canada and Australia, along with global Purchasing Managers’ Index (PMI) reports, should be closely monitored.
Heightened geopolitical tensions, particularly the ongoing conflict between Israel and Iran, remain a wildcard that could spur additional demand for the dollar and Swiss franc as “safe-haven” assets.
Indices: Mixed Signals Despite Near-Record Highs
US equity markets have shown resilience, with the S&P 500 and Nasdaq approaching near all-time highs after a strong rebound since April’s lows. The Nasdaq has climbed approximately 35% and the S&P 500 about 26% since then. However, last week saw some consolidation and a slight pull back.
The rally has been largely driven by strength in industrial and technology sectors, especially semiconductor stocks. Yet, underlying economic data paints a more cautious picture. Indicators such as retail sales, industrial output, and housing metrics have softened, signaling potential headwinds ahead. Rising import prices and tariff tensions add to concerns about inflationary pressures and their impact on consumer spending.
Valuations remain elevated, with the S&P 500’s forward price-to-earnings ratio sitting approximately 21 times earnings, well above historical averages. While investor sentiment is still broadly bullish, the combination of stretched valuations and geopolitical uncertainties suggests a need for caution.
Commodities: Watch Gold and Energy Prices
Gold prices experienced minor volatility last week, maintaining close proximity to all-time-highs.
Oil markets are particularly sensitive to geopolitical developments at this time. The US military struck Iranian targets over the weekend, and Brent crude oil prices gapped and opened higher on Monday’s open. The risk premium on oil prices is also elevated, due to a likely Iranian retaliation and supply disruptions. Last week’s close already reflected heightened prices, and the situation remains fluid.
Key Themes and What to Watch
- Geopolitical Risk: The escalating conflict involving Iran and Israel is a central theme, driving demand for “safe-haven” assets like the US dollar and gold. The conflict has the potential to push energy prices higher.
- Central Bank Policy: The Fed’s steady approach supports the dollar, while more cautious or dovish stances from other central banks weigh on their respective currencies, particularly the GBP and JPY.
- Equity Market Dynamics: While stocks have rebounded strongly, economic data and valuation concerns suggest a more cautious outlook.
- Commodity Volatility: Oil and gold remain highly sensitive to geopolitical developments, with the potential for further price swings.
Traders should remain vigilant and keep a close eye on this week's key events, as well as developments in the Middle East. These factors will likely dictate market direction in the coming days.
Stay informed with our economic calendar
This week's high impact economic events have the potential to cause considerable price movements, offering you both opportunities and risks. Stay informed with our economic calendar to access real-time data as these key events unfold. Our economic calendar is provided by Trading Central, with data from Morningstar Research Inc.
All Times are in GMT+3
Tuesday 24th June
| 3:30PM | CAD | CPI m/m |
| 3:30PM | CAD | Median CPI y/y |
| 3:30PM | CAD | Trimmed CPI y/y |
| 5:00PM | GBP | BOE Gov Bailey Speaks |
| 5:00PM | USD | Fed Chair Powell Testifies |
Wednesday 25th June
| 4:30AM | AUD | CPI y/y |
| 5:00PM | USD | Fed Chair Powell Testifies |
Thursday 26th June
| 2:00PM | GBP | BOE Gov Bailey Speaks |
| 3:30PM | USD | Final GDP q/q |
| 3:30PM | USD | Unemployment Claims |
Friday 27th June
| 3:30PM | CAD | GDP m/m |
| 3:30PM | USD | Core PCE Price Index m/m |
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