Markets came out swinging on Monday as traders digested Trump’s latest tariff threats and geared up for fresh inflation reads.
With headlines flying and risk sentiment flipping like a pancake, price action got real choppy across the board.
Here are headlines you may have missed in the last trading sessions!
Headlines:
- U.S. President Trump threatened 30% tariffs on EU and Mexican goods from August 1
- Australian PM Albanese pledged to work with China on excess steel capacity
- New Zealand Composite NZ PCI for June: 48.3 (46.0 forecast; 44.3 previous)
- New Zealand Services NZ PSI for June: 47.3 (45.6 forecast; 44.0 previous)
- Japan machinery orders for May: 4.4% y/y (5.5% y/y forecast; 6.6% y/y previous); -0.6% m/m (0.5% m/m forecast; -9.1% m/m previous)
-
China balance of trade for June: 114.77B (100.0B forecast; 103.22B previous)
- China imports for June: 1.1% y/y (2.5% y/y forecast; -3.4% y/y previous)
- China exports for June: 5.8% y/y (5.5% y/y forecast; 4.8% y/y previous)
- Japan industrial production final for May: -2.4% y/y (-1.8% y/y forecast; 0.5% y/y previous); -0.1% m/m (0.5% m/m forecast; -1.1% m/m previous)
- German 30-year yield hit 21-month highs and 10-year yields hit their highest since April after Trump’s EU tariff threats
- EU extended suspension of trade countermeasures against the US until August 1 to allow for negotiations
- Reuters cited five ECB sources who don’t think U.S. tariff threats will derail rate cut pause plans next week
- Swiss producer & import prices for June: -0.1% m/m (0.1% m/m forecast; -0.5% m/m previous); -0.7% y/y (-0.6% y/y forecast; -0.7% y/y previous)
- FOMC member Hammack doesn’t see an imminent need to cut rates, said inflation is still “too high”
- Canada wholesale sales final 0.1% m/m (-0.4% m/m forecast; -2.3% m/m previous)
- U.S. President Trump threatened 100% tariffs, secondary sanctions on Russia if no Ukraine peace deal is made in 50 days
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
The major assets were all over the place Monday as traders priced in global trade headlines and braced for a new company earnings season. In Europe, the UK’s FTSE 100 popped 0.41% to close at a new all-time high of 8,998.07. Meanwhile, Germany’s DAX dropped 0.94% and France’s CAC 40 slipped 0.44%, both feeling the heat from Trump’s proposed 30% tariffs on EU goods.
U.S. stocks held up better. The Nasdaq logged another record finish at 20,640.33, up 0.27%, with traders leaning on the hope that deals will get hashed out before the August deadline.
In the bond world, the 10-year Treasury yield crept up to 4.43%, flirting with one-month highs as traders weighed inflation risks from the tariffs against the odds of Fed rate cuts. Gold got a boost early on from safe-haven demand but turned lower to end at $3,342 once talk of ongoing trade talks between the U.S. and the EU, Mexico, Brazil, and other partners picked up steam.
Oil took a wild ride. WTI crude jumped to $69.60 on talks of possible Russia sanctions, but then sank to $66.98 by the close, down 2.15%, as the U.S.’s 50-day deadline gave markets some breathing room on supply worries. Bitcoin kept flexing its muscles, pushing to a fresh record high of $123,236 before cooling off around $120,000.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Majors Chart by TradingView
After an initial trip lower, the Greenback gained bullish momentum, jumping to three-week highs in Asia as Trump’s 30% tariff threats on the EU and Mexico triggered safe-haven demand. The rally didn’t last long, as risk appetite crept back in during the European session after signs that both Brussels and Mexico City still want to talk things out before the August 1 deadline.
EUR/USD bounced off early lows near 1.1650 and made a run at 1.1700 after EU Trade Commissioner Sefcovic said he’d speak with U.S. officials later in the day. The pound took a hit, dropping 0.55% as traders braced for possible BOE cuts. Aussie and Kiwi also lagged, with AUD/USD down 0.47% and NZD/USD falling 0.55%.
The dollar found fresh legs during U.S. hours after Fed’s Hammack emphasized the need for policy patience and Trump escalated tensions by threatening 100% tariffs on Russia if no Ukraine peace deal materializes within 50 days. By session’s end, the dollar index had gained for a sixth straight day, marking its best run this year.
Upcoming Potential Catalysts on the Economic Calendar
- Germany ZEW economic sentiment index for July at 9:00 am GMT
- Euro Area industrial production for May at 9:00 am GMT
- Euro Area ZEW economic sentiment index for July at 9:00 am GMT
- Canada housing starts for June at 12:15 pm GMT
- Canada new motor vehicle sales for May at 12:30 pm GMT
- Canada manufacturing sales final for May at 12:30 pm GMT
- Canada consumer price index growth rate for June at 12:30 pm GMT
- U.S. consumer price index for June at 12:30 pm GMT
- U.S. NY Empire State manufacturing index for July at 12:30 pm GMT
-
FOMC member speeches
- U.S. Fed Bowman speech at 1:15 pm GMT
- U.S. Fed Barr speech at 4:45 pm GMT
- U.S. Fed Collins speech at 6:45 pm GMT
- U.K. BOE Gov Bailey speech at 8:00 pm GMT
- U.S. API crude oil stock change for July 11 at 8:30 pm GMT
- Japan Reuters Tankan index for July at 11:00 pm GMT
The London session may bring euro volatility as traders react to Germany and Euro Area ZEW sentiment and industrial production, with weak data likely pressuring the euro.
In the U.S. session, all eyes are on the CPI reports from both the U.S. and Canada at 12:30 pm GMT, with dollar and Loonie pairs primed for sharp moves depending on how inflation data lines up with rate cut expectations.
Oh, and don’t forget to stay glued to the tube for any trade-related updates that might influence the demand for “risk” and safe-haven currencies!
As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!
