🌏 Trade Risks Ease, Focus Shifts to US-Japan Monetary Policy & Jobs Data
📰 Trade Developments: Progress Brings Clarity
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US–EU reach tariff agreement
Both sides converge on a 15% tariff level.
Agreement includes further market liberalization in autos and agriculture, and a $550 billion US-bound investment pledge.
Japanese stocks—especially auto-related—surge; the Nikkei briefly jumps +1,500 points. -
US–China negotiations extended
Deadline extended by 90 days.
Working-level talks to resume today at the Rosenbad Palace in Stockholm. -
Markets signal “deal risk priced in”
Fears of escalation recede.
With trade risks largely digested, markets adopt a cautious wait-and-see stance.
💱 FX Market: Direction Unclear Amid Mixed Signals
USD/JPY
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Yen initially strengthened after the trade deal but reversed on renewed yen-selling.
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Political uncertainty in Japan (resignation rumors of PM Ishiba) weighs on yen.
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A report from Asahi Shimbun suggesting the BoJ is unlikely to hike rates adds further pressure on the yen.
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USD/JPY rebounds from 146 (low) to high 147s.
EUR/USD
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Former President Trump suggests a 30% tariff on the EU and Mexico, pushing the euro lower.
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EUR briefly falls to 1.1651 but recovers to the 1.1690 range during London trading.
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German 30-year bond yields rise, supporting the euro.
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EU reportedly preparing a retaliatory tariff list; Commissioner Šefčovič to hold emergency talks with US officials.
DXY (US Dollar Index)
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Dollar starts the week strong, reaching levels last seen on July 21.
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Rises from 97.492 in Tokyo to 98.153 in London.
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Technical breakout above the 10- and 21-day MAs signals continued bullish momentum.
📅 Key Events Ahead (Late Week)
| Date | Event | Notes |
|---|---|---|
| July 31 (Wed) | BoJ Policy Meeting | Expectation of no change (per Asahi Shimbun report) |
| July 31 (Wed) | US FOMC Meeting | Consensus points to no rate change |
| August 2 (Fri) | US Nonfarm Payrolls (NFP) | Crucial indicator for future Fed policy direction |
🔍 Other Notable Developments
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Uncertainty grows over PM Ishiba's departure timing within Japan’s LDP.
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Fed enters blackout period; no public comments from officials expected.
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Following the ECB meeting, focus shifts to the timing of potential eurozone rate cuts.
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Today's key releases: Global PMI flash estimates, ECB speakers, Canadian retail sales, US new home sales, etc.
📝 Summary & Outlook
While trade-related risks have eased, attention now turns to domestic political dynamics in Japan and upcoming monetary policy decisions in the US and Japan. The FOMC and BoJ meetings, along with Friday’s US NFP, are expected to set the tone for markets. Given their potential impact, the latter half of the week could see heightened volatility and possibly a decisive breakout in trend. Continued vigilance is warranted.
