Market Quote: Euro Continues to Rise, U.S. Spending Bill Hits Pothole
Author: The editor's desk
June 25, 2025
A weekly analysis of what’s happening in global financial markets from the perspective of AGF’s investment management team.
Euro-Only Getting Started
We have observed renewed weakness in the U.S. dollar, with the Euro rallying to its highest level since October 2021 earlier this week.
U.S. Federal Reserve (Fed) officials — including Governors Waller and Bowman, as well as Chair Powell – have recently made dovish comments, opening the door for a possible July interest rate cut. Meanwhile, soft U.S. economic data continues to support a dovish Fed stance, which is negative for the U.S. dollar.
On the euro side, a ceasefire between Israel and Iran is a potential relief for the euro as it lowers the likelihood of a regional conflict at Europe’s doorstep and reduces inflationary pressure from higher oil prices.
We believe the U.S. dollar will continue to weaken structurally over the long term, although a short-term rebound is possible. Structural changes in fiscal policies, international trade policies, and geopolitical relations across the globe have marginally altered the role of the U.S. Dollar as a safe-haven and reserve currency. The implications of this shift in portfolio management and foreign direct investment may take months or years to unfold.
Spend (Th)rift
The U.S. administration’s “big beautiful bill” hit a pothole, not surprisingly, as negotiators stalled on the most controversial issue of the fiscal spending package: deep cuts in Medicaid outlays, which are opposed by all Democrats and a handful of moderate Republicans.
Trump is demanding action, threatening to keep Congress in town during the July 4 recess, but that will simply antagonize the lawmakers. Rule No. 1 — don’t mess with vacation plans for members and their families.
We still think the bill will pass, but it may come later rather than sooner. Trump wants the U.S. Federal Reserve to move soon — but that won’t happen if there’s no clarity on fiscal policy.
The views expressed in this blog are those of the author and do not necessarily represent the opinions of AGF, its subsidiaries or any of its affiliated companies, funds, or investment strategies.
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Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. Our companies deliver excellence in investing in the public and private markets through three business lines: AGF Investments, AGF Capital Partners and AGF Private Wealth.
AGF brings a disciplined approach, focused on incorporating sound, responsible and sustainable corporate practices. The firm’s collective investment expertise, driven by its fundamental, quantitative and private investing capabilities, extends globally to a wide range of clients, from financial advisors and their clients to high-net worth and institutional investors including pension plans, corporate plans, sovereign wealth funds, endowments and foundations.
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