Asset classes appeared to be struggling to find direction early in the day, before a wave of risk-taking from the US-Japan trade agreement took over, lifting equities and crude oil.
Gold, on the other hand, spent most of the day in the red while traders dumped safe-haven holdings on improving global trade optimism.
Here are headlines you may have missed in the last trading sessions!
Headlines:
- U.S. and Japan reached a trade agreement, Japanese bond yields and Nikkei surged
- Australia Westpac Leading Index for June 2025: 0.0% m/m (0.2% m/m forecast; -0.1% m/m previous)
- BOJ Governor Uchida announced that trade deal between the U.S. and Japan is big progress and helps reduce policy uncertainty
- Reuters and Japanese media reports suggested that Japanese PM Ishiba is mulling resignation to take responsibility for election loss
- Japanese Finance Minister Kato reiterated that forex levels are not being discussed in trade negotiations with U.S.
- Japanese Prime Minister Ishiba dismissed rumors of his possible resignation
- U.S. MBA Mortgage Applications for July 18, 2025: 0.8% (-10.0% previous)
- European Commission President von der Leyen mentioned that EU and Japan will work more closely to address unfair trade policies
- Russia and Ukraine conducted another POW exchange, easing geopolitical tensions
- U.S. Treasury Secretary Bessent says that EU talks are going better and that Trump has confirmed he won’t be firing Fed head Powell
- U.S. Commerce Secretary Lutnick highlighted Japan trade deal as a possible blueprint for EU tariffs agreement
- Canada New Housing Price Index for June 2025: -0.2% m/m (0.1% m/m forecast; -0.2% m/m previous)
- Euro area Consumer Confidence Flash for July 2025: -14.7 (-15.0 forecast; -15.3 previous)
- U.S. Existing Home Sales for June 2025: -2.7% m/m (-0.7% m/m forecast; 0.8% m/m previous); Existing Home Sales for June 2025: 3.93M (4.0M forecast; 4.03M previous)
- U.S. EIA Crude Oil Stocks Change for July 18, 2025: -3.17M (-3.86M previous)
Broad Market Price Action:
Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView
Asian session traders woke up to news of the U.S. and Japan finally reaching a trade agreement, leading to a move higher for crude oil and global equity futures early in the day.
However, the energy commodity wound up erasing its gains as the London session went on, likely on easing Russian oil sanctions fears after the country conducted another POW exchange with Ukraine, only finding a bottom after the EIA crude oil inventories report indicated a surprise reduction in stockpiles.
Gold, on the other hand, slowly shed more of its safe-haven winnings while investors shifted to higher-yielding assets. The precious metal chalked up an even steeper decline during U.S. market hours, as White House officials continued to highlight the U.S.-Japan deal as a possible model for other trade partners such as the EU.
European equity indices found themselves in positive territory, as market players hoped that the EU could soon strike a deal with the U.S. as well. U.S. Treasury Secretary Bessent mentioned that negotiations with the EU are going better than before while Commerce Secretary Lutnick even suggested that the Japan trade deal could serve as a model for an agreement with the EU.
U.S. equities were also in a cheery mood, with the S&P 500 index closing 0.78% higher and the Nasdaq scoring a 0.61% win thanks to strong earnings data from Tesla and Alphabet, on top of improvements in overall market sentiment.
FX Market Behavior: U.S. Dollar vs. Majors:
Overlay of USD vs. Majors Chart by TradingView
The big news early in the day was Japan’s trade deal with the U.S. that gave the dollar a bit of support mostly against European counterparts. However, USD/JPY kept tossing and turning, as yen traders also got wind of reports that Japanese Prime Minister Ishiba was considering resigning from his post after his party’s brutal election loss.
PM Ishiba himself later on refuted these rumors, allowing Asian market players to put their focus back on positive global trade developments and retain cautious optimism for further progress ahead of the August 1 tariffs deadline.
Commodity currencies took advantage of improving market sentiment early on, accelerating their climb against the dollar during the London session as traders became more hopeful that the EU and US could strike a trade agreement soon.
After a bit of a pullback on profit-taking ahead of the U.S. session, weaker than expected U.S. existing home sales data allowed USD to resume its downward trajectory, closing lower across the board, most notably against the higher-yielding AUD and NZD.
Upcoming Potential Catalysts on the Economic Calendar
- Germany GfK Consumer Confidence at 6:00 am GMT
- France HCOB Manufacturing & Services PMI Flash at 7:15 am GMT
- Germany HCOB Manufacturing & Services PMI Flash at 7:30 am GMT
- Euro area HCOB Manufacturing & Services PMI Flash at 8:00 am GMT
- U.K. S&P Global Manufacturing & Services PMI Flash at 8:30 am GMT
- U.K. CBI Business Optimism Index at 10:00 am GMT
- U.K. CBI Industrial Trends Orders at 10:00 am GMT
- Euro area ECB Interest Rate Decision at 12:15 pm GMT
- Canada Retail Sales at 12:30 pm GMT
- Canada Manufacturing Sales at 12:30 pm GMT
- Canada New Housing Price Index at 12:30 pm GMT
- U.S. Chicago Fed National Activity Index at 12:30 pm GMT
- U.S. Initial Jobless Claims at 12:30 pm GMT
- Euro area ECB Press Conference at 12:45 pm GMT
- New Zealand RBNZ Conway Speech at 1:30 pm GMT
- U.S. S&P Global Manufacturing & Services PMI Flash at 1:45 pm GMT
- U.S. New Home Sales at 2:00 pm GMT
- U.S. Kansas Fed Manufacturing Index at 3:00 pm GMT
- U.S. Fed Balance Sheet at 8:30 pm GMT
It’s bound to be an extra busy day in the markets since the economic schedule is decked with global flash PMI releases, plus the ECB monetary policy decision to boot!
Don’t forget to keep your eyes and ears peeled for ECB head Lagarde’s presser a few moments after the actual announcement since euro traders are keen to find out what the central bank’s next moves might be and when.
Apart from all that, look out for the release of U.S. initial jobless claims data and Canada’s retail sales report that could also spur big swings for USD and CAD during the New York session.
As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!
