Market sentiment is weighed down by a mix of U.S. economic data, President Trump’s trade and political threats, and caution ahead of key data releases. While the EU-U.S. trade framework raised hopes, Trump's recent warnings on tariffs—especially targeting India after a 25% tariff announcement—have kept markets uneasy. In a CNBC interview, Trump also criticized Russia's lack of action on Ukraine and suggested raising tariffs on India, a key oil buyer, as a leverage point.
Trump showed some optimism for trade talks with China and the EU, offering to cut EU tariffs to 15% if the bloc meets his demands. However, China’s recent curbs on rare earth metals and Nvidia’s refusal to comply with U.S. requests to install backdoors in chips have added to the market tension.
U.S. economic data showed some bright spots, with the S&P Global PMI for July performing well, but the ISM Services PMI came in weaker. The Atlanta Fed raised its Q3 GDP growth estimate to 2.5%. Meanwhile, the U.S. June trade balance improved slightly to -$60.2 billion, better than expected.
On the earnings front, AMD’s results were solid but weighed down by concerns over slower data-center growth. Super Micro Computer also missed expectations, with tariffs affecting performance. Wall Street ended lower, reflecting both disappointing data and geopolitical tensions.
The U.S. Dollar Index (DXY) has been directionless for three consecutive days, while EURUSD struggles to gain from the EU-U.S. trade deal. GBPUSD has posted a four-day rally ahead of the Bank of England's decision, while USDJPY retraces after a brief rebound amid speculation over potential BoJ rate hikes and weak real wages data from Japan.
AUDUSD and NZDUSD edge higher, and USDCAD extends its four-day losing streak despite a lack of strong downward momentum. Crude oil bounced from a week’s low, halting its four-day uptrend, while gold is struggling to maintain its four-day winning streak after hitting resistance.
Cryptocurrencies remain volatile, with Bitcoin under pressure and Ethereum recovering from recent losses. U.S. stock futures show slight gains, while Asian and European stocks are mixed, with no clear direction. Bond yields have also been steady after a week of declines.
President Donald Trump recently expressed willingness to lower EU tariffs to 15%, down from 30%, if the EU agrees to increased U.S. investments and purchases. Both Trump and EU officials have shown optimism about reaching a deal, with the EU previously critical of the high tariff rate.
Meanwhile, the European Central Bank (ECB) remains cautious due to mixed economic data from the EU, while U.S. PMIs also fell short of expectations, strengthening the case for a Fed rate cut in September. However, Trump’s ongoing political pressure on independent bodies like the Fed and BLS complicates the outlook.
Despite this, the U.S. Dollar’s struggle to rise and the mixed market sentiment support EURUSD buyers, who are waiting for further developments on the EU-U.S. trade talks, June EU Retail Sales data, and upcoming speeches from mid-tier Fed officials.
The U.S. Dollar’s weak performance, coupled with rising expectations for a favorable U.S.-UK trade deal, is supporting GBPUSD’s four-day uptrend, though the upside momentum remains modest. The market is also eyeing Thursday’s Bank of England (BoE) policy decision, with a 0.25% rate cut expected, which adds further support to GBPUSD, especially when traders prepare for a fall after the BoE.
USDJPY is reversing its recent rebound from a week’s low, as concerns grow over a potential Bank of Japan rate hike. Despite Japan’s real wages continuing their decline for the sixth month in a row, the yen's traditional safe-haven status and the uncertain outlook for the USD are weighing on USDJPY.
Despite mixed sentiment and a weak New Zealand employment report, both AUDUSD and NZDUSD register modest gains. USDCAD is seeing a bit of a pause after a three-day losing streak. Hopes for positive U.S.-China and U.S.-Canada trade deals, combined with a lack of major U.S. data, are allowing these commodity-linked pairs to edge higher in a quiet market day.
Gold stalls its four-day winning streak, pressured by concerns over speculative actions in China, a WGC report showing Gold ETF outflows, and declining retail demand. Additionally, market consolidation, a light economic calendar, and U.S. tensions with India—one of the world’s largest gold buyers—are also challenging gold buyers.
Crude oil recovers from a week’s low, halting a four-day losing streak, despite a surprise rise in U.S. oil inventories, as reported privately. Trump’s praise of OPEC+ for increasing supply failed to drive further gains. However, geopolitical tensions, including Israel’s potential action in Gaza and growing U.S.-Russia tensions, are providing a corrective bounce in oil prices ahead of today’s official U.S. inventory data.
Despite ongoing pro-industry measures from the Trump administration and crypto-friendly firms adding BTC and ETH to their reserves, cryptocurrencies are lacking upside momentum. Bitcoin (BTC) remains under pressure, while Ethereum (ETH) is recovering, likely due to ETF outflows and caution following last week’s technical breakdown.
Wall Street and other global equity markets edged lower, unable to capitalize on strong earnings reports. Tariff concerns and uncertainty surrounding Fed actions continue to weigh on sentiment.
Looking ahead, market attention will be on Eurozone Retail Sales for June and speeches from second-tier Fed policymakers. However, the real market-moving developments are likely to come from updates on U.S. trade deals with the EU, Canada, and China. Additionally, Trump’s push for a ceasefire with Russia over Ukraine, which Moscow appears to acknowledge with a partial air ceasefire, could boost market sentiment.
This could support riskier assets like cryptocurrencies and equities, putting pressure on the U.S. Dollar. It would also benefit Gold and the Antipodean currencies, though crude oil prices will also be influenced by U.S. inventory data. Overall, cautious optimism is expected, which could lead to a weaker U.S. Dollar and allow EURUSD to edge higher—especially if the EU-U.S. trade deal is finalized and EU retail sales show improvement.
May the trading luck be with you!
