On July 21st, global financial markets experienced notable shifts, with the Japanese Yen hitting an unprecedented 40-year low against the US Dollar. Concurrently, trade relations between the United States and Canada became increasingly strained due to new tariff announcements, while equity markets in both the US and Europe showed strong performance, particularly in the technology and artificial intelligence sectors. The day also witnessed an upward trend across various commodities, including oil, precious metals, and cryptocurrencies.
The session concluded with the US Dollar strengthening against most major currencies, with the Australian Dollar being a minor exception, showing a slight gain of 0.11% against the greenback. The Japanese Yen stood out as the weakest performer, depreciating by 0.42% against the USD, pushing the USDJPY pair to a new four-decade peak. This movement was primarily fueled by an increase in US Treasury yields and the persistent divergence in monetary policies between the Federal Reserve and the Bank of Japan.
The US Dollar also saw considerable gains against the Swiss Franc, reinforcing its recent upward momentum. Against the Canadian Dollar, the greenback advanced by 0.26%, as markets reacted to the imposition of new tariffs by the Trump administration on Canadian goods. Conversely, the Euro and New Zealand Dollar each recorded modest increases of 0.11% and 0.15% against the USD, respectively, in what was otherwise a relatively subdued trading day for these currencies. The British Pound emerged as the strongest major currency, gaining 0.34% against the dollar.
The US-Canada trade conflict intensified following the Trump administration's announcement of a 50% tariff on a wide array of Canadian imports. These tariffs, which cover automobiles, dairy, and alcoholic beverages, are set to take effect on August 19, allowing a 30-day window for negotiations. Canadian Prime Minister Mark Carney criticized these measures as a violation of the USMCA agreement, threatening potential retaliatory actions. Despite the escalating tension, both nations have expressed a willingness to continue negotiations.
US Treasury yields rose across the board, with shorter-term maturities leading the way, as investors anticipated a prolonged period of higher interest rates. This rise in yields provided additional support for the US Dollar, particularly against currencies offering lower returns like the Japanese Yen and Swiss Franc. The 2-Year Treasury yield increased by 4.86 basis points to 4.2636%, while the 10-Year Treasury yield saw a 3.24 basis point rise to 4.6301%.
US stock markets closed significantly higher, with all major indices ending in positive territory. Investors showed renewed interest in technology and AI companies, leading to a strong rally. Small-cap stocks outperformed, and the NASDAQ index benefited from a robust rebound in the semiconductor sector. This market surge occurred despite rising Treasury yields, underscoring strong investor confidence in AI and growth-oriented stocks. European markets also posted gains.
The Dow Jones Industrial Average climbed 386.04 points, or 0.74%, to close at 52,230.23. The S&P 500 advanced 65.92 points, a 0.89% increase, reaching 7,509.21. The NASDAQ Composite saw a significant jump of 329.13 points, or 1.29%, closing at 25,837.21, while the Russell 2000 gained 44.97 points, or 1.53%, to finish at 2,987.40. Key performers included Nebius Group (+18.76%), Sandisk (+14.27%), and Micron (+12.17%). Within the Dow 30, industrial, healthcare, financial, and technology sectors led the gains, with 3M, UnitedHealth, and Caterpillar showing strong performances. Despite some underperformers like Boeing and Salesforce, broad-based buying in technology and cyclical sectors propelled the major indices to near their session highs.
Beyond equities, crude oil prices increased by over 2%, and gold surged by $74, or 1.85%, to $4083 per ounce. Silver also saw a substantial gain of $2.21, or 3.9%, reaching $58.68. Bitcoin continued its upward trajectory, increasing by over $1000 to reach $66,352. The day's trading activity clearly reflected strong investor engagement across various asset classes, influenced by currency fluctuations, trade policies, and sector-specific developments.
In summary, July 21st was a dynamic day in financial markets, characterized by the Japanese Yen's historic decline, escalating trade tensions between the US and Canada, and strong rallies in global equity markets, particularly driven by tech and AI. Commodities also experienced notable gains. These interconnected events highlight the complex interplay of macroeconomic factors and geopolitical developments shaping the global economic landscape.