Dollar weakness was the name of the game for the most part of the day, as the safe-haven currency was dragged lower by risk-taking and dovish Fed commentary.
Meanwhile, crude oil caught early gains thanks to elevated geopolitical tensions before tanking sharply on reports of progress in US-Russia talks.
Here are headlines you may have missed in the last trading sessions!
Headlines:
- Japan Average Cash Earnings YoY for June 2025: 2.5% (3.1% expected, 1.4% previous)
- Japan LDP ruling party official Taro Kono called for higher BOJ interest rates, citing inflationary effect of yen’s weakness against the dollar
- Reports indicate Russian and Chinese naval vessels geared up to carry out joint patrols in Asia-Pacific region
- Germany Factory Orders MoM for June 2025: -1.0% (0.7% forecast; -1.4% previous)
- France Private Non Farm Payrolls QoQ Prel for June 30, 2025: 0.0% (-0.1% forecast; -0.1% previous)
- Euro area HCOB Construction PMI for July 2025: 44.7 (46.0 forecast; 45.2 previous)
- Germany HCOB Construction PMI for July 2025: 46.3 (45.9 forecast; 44.8 previous)
- France HCOB Construction PMI for July 2025: 39.7 (42.0 forecast; 41.6 previous)
- U.K. S&P Global Construction PMI for July 2025: 44.3 (49.6 forecast; 48.8 previous)
- Euro area Retail Sales YoY for June 2025: 3.1% (2.5% forecast; 1.8% previous); Euro area Retail Sales MoM for June 2025: 0.3% (0.3% forecast; -0.7% previous)
- Canada S&P Global Services PMI for July 2025: 49.3 (45.0 forecast; 44.3 previous); Canada S&P Global Composite PMI for July 2025: 48.7 (46.0 forecast; 44.0 previous)
- U.S. EIA Crude Oil Stocks Change for August 1, 2025: -3.03M (7.7M previous)
- Fed official Kashkari acknowledged that it may be appropriate adjust rates in the near term, better to cut rates now then hold later
- U.S. President Trump imposed additional 25% tariffs on India’s imports as penalty for buying large amounts of oil from Russia
- Bloomberg reported that Trump is considering sanctions on Russia’s covert fleet of oil tankers
- Fed official Collins explained that it’s key to understand how uncertainties are affecting the economy
- Fed official Daly reiterated that they might need to adjust policy in the coming months, tariffs unlikely to materially boost inflation and labor market has softened
- Reports confirmed that White House envoy Whitkoff met with Russian President Putin and that another meeting between Trump and Putin could happen next week
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Markets seemed to be in a risk-on mood in the early trading sessions, as higher-yielding assets cruised higher during Asian and London market hours while safe-havens found themselves in the red.
Crude oil, in particular, found support from elevated geopolitical tensions as reports swirled that Chinese and Russian naval vessels are ready to carry out join patrols in the Asia-Pacific region.
Further gains were seen on the announcement of additional 25% tariffs on India and rumors that Trump is considering sanctions on Russia’s covert fleet of oil tankers, but these were soon unwound during the U.S. session on some signs of progress in talks with Russian President Putin.
Gold was on the back foot early on, as safe-haven flows ebbed on account of cautious optimism in trade talks, eventually closing 0.32% lower despite a slight bounce during the New York session. Bitcoin held on to the $114K mark for the most part of the day, before accelerating its climb to the $115K level on overall dollar weakness stemming from dovish Fed commentary.
U.S. equity indices also turned higher as Fed officials started talking up the possibility of lowering borrowing costs soon, with FOMC member Kashkari reinforcing the likelihood of two rate cuts this year and policymaker Daly reiterating that the labor market has softened.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Majors Chart by TradingView
The dollar kicked off on bearish footing early on, as risk-taking appeared to weigh on the safe-haven currency. The Kiwi enjoyed extra gains thanks to its quarterly jobs report, with underlying figures showing a pickup in wages and allowing traders to shrug off the headline dip in hiring, while the Aussie followed suit.
Meanwhile, the yen was slightly weaker after its average cash earnings report showed muted wage growth, further dampening expectations of BOJ tightening. Still, an LDP official reiterated the call for higher interest rates, citing how the yen’s weakness against the dollar is stoking domestic inflation.
The dollar caught another brief rally against the yen and the Swiss franc as European markets opened, before staging a more prolonged slide as the session went on and risk appetite remained elevated on account of cautious optimism.
Another round of USD losses was seen when Fed official Kashkari mentioned in an interview that it may be appropriate to adjust rates in the near-term, adding that it’s better to cut now then pause later than wait for more clarity in data. Fed official Daly echoed this view, citing that tariffs are unlikely to materially boost inflation and that jobs growth has already slowed, forcing the dollar to close lower across the board.
Upcoming Potential Catalysts on the Economic Calendar
- China Balance of Trade at 3:00 am GMT
- New Zealand Business Inflation Expectations at 3:00 am GMT
- Japan Leading Economic Index at 5:00 am GMT
- Swiss Unemployment Rate at 5:45 am GMT
- Germany Balance of Trade at 6:00 am GMT
- Germany Industrial Production at 6:00 am GMT
- U.K. Halifax House Price Index at 6:00 am GMT
- Swiss Foreign Exchange Reserves at 7:00 am GMT
- U.K. BOE Policy Decision at 11:00 am GMT
- U.S. Unit Labor Costs at 12:30 pm GMT
- U.S. Nonfarm Productivity at 12:30 pm GMT
- U.S. Initial Jobless Claims at 12:30 pm GMT
- Canada Ivey PMI at 2:00 pm GMT
- U.S. Wholesale Inventories at 2:00 pm GMT
- Fed official Bostic’s Speech at 2:00 pm GMT
- Fed official Musalem’s Speech at 2:20 pm GMT
- U.S. Consumer Inflation Expectations at 3:00 pm GMT
- U.S. Consumer Credit Change at 7:00 pm GMT
- U.S. Fed Balance Sheet for August 6, 2025 at 8:30 pm GMT
- Japan Household Spending at 11:30 pm GMT
- BoJ Summary of Opinions at 11:50 pm GMT
- Japan Current Account at 11:50 pm GMT
We’ve got a busy schedule ahead, as top-tier catalysts are lined up for all trading sessions today!
Look out for China’s trade balance during Asian market hours, particularly any major gains or losses in import and export activity that could impact the global trade outlook, followed by the highly-anticipated Bank of England’s monetary policy decision during the London session.
After that, we’ve got the U.S. initial jobless claims figure that could shake things up during the New York session, along with speeches by a couple of Fed officials and the U.S. consumer inflation expectations report. Keep an eye out for Canada’s Ivey PMI figure that could influence BOC policy expectations as well.
As always, look out for global trade developments and geopolitical headlines that could influence overall market sentiment. Stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!
