Market Highlight 02.07.2026

Federal Reserve Chair Kevin Warsh on Wednesday declined to say whether the Central Bank needs to consider raising interest rates later this month, but said that in his first few weeks in office he had seen inflation risks gradually ease. He reaffirmed the message from his first press conference as FED Chair last month that the Central Bank will deliver price stability. The FED’s latest preferred inflation gauge showed a 4,1% increase from a year earlier, with prices of essential goods and services excluding food and energy rising 3,4%. However, energy and gasoline prices have fallen sharply in recent weeks as the U.S and Iran have held peace negotiations.

The USD strengthened (+0,24%) ahead of the U.S employment report due on Thursday night, but pared some of its earlier gains after FED Chair Kevin Warsh said that inflation expectations and inflation risks had gradually declined in recent weeks. The USD was supported by rising expectations that the Federal Reserve may raise interest rates later this year, as inflation remains well above the FED’s 2% annual target. However, many forecasts suggest that the inflation picture will improve in the coming months. Even without a more hawkish monetary policy stance from the FED, other factors are also attracting capital flows into the U.S and supporting the USD, particularly the boom in investment driven by artificial intelligence (AI). The market is now pricing in a probability of more than 65% that the FED will raise interest rates in September.

Domestically, interbank USD/VND fell by around VND 15 on the first trading day of July and closed the day at 26.300. The SBV kept the daily ceiling unchanged on Wednesday at 26.466.

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