US-EU trade deal boosts sentiment on Monday
The Australian dollar was stronger on Monday morning on news of a US-EU trade deal stuck over the weekend. Other risk sensitive currencies also gained.
US president Donald Trump announced the deal in Scotland saying he would lower the tariff on EU imports from 30% to 15% while the EU committed to invest USD600 billion into the US and expand energy purchases.
However, the US dollar had gained going into the weekend with markets relieved after a critical meeting between Trump and Federal Reserve chair Jerome Powell seemed to show a cooling in tensions.
On Friday, the AUD/USD was lower with the AUD/USD down 0.4%. The NZD/USD fell 0.1%.
In Aisa, the USD/SGD gained 0.3% while USD/CNH climbed 0.2%.
Yen edges lower as Japan inflation cools and politics heat up
Tokyo inflation eased in July, with headline and core consumer prices rising 2.9% from a year earlier—slightly down from 3% and 3.1% in June. The core-core CPI, which strips out fresh food and energy, held steady at 3.1%, as expected. Softer price trends could ease pressure on the Bank of Japan to raise rates soon. Current market is pricing in 80% likelihood of a December rate hike.
Political tension is rising, with an extraordinary Diet session and a key LDP meeting taking place today. Both could stir market sentiment.
USD/JPY has bounced off the key support levels of 100-day EMA of 146.51 and 21-day EMA of 146.66 and now eyes the psychological barrier at 150.
Fed, US jobs due in big week
The final week of July and start of August bring a packed economic calendar, with central bank rate decisions and key inflation and labor data across major economies. The US Federal Reserve and Bank of Canada will announce policy decisions, while the Bank of Japan and ECB inflation expectations are also in focus. Markets anticipate no rate changes from the Fed (upper bound: 4.50%, lower bound: 4.25%) or BoC (2.75%), though forward guidance will be scrutinized for clues on future policy paths. Japan is likewise expected to hold steady at 0.5%.
US GDP (Q2 advance, consensus: +2.5% QoQ) is set to rebound from last quarter’s dip, with ADP employment change (July, consensus: +80k) and nonfarm payrolls (Jul, consensus: +101k) offering key labor market signals. Eurozone GDP (Q2 advance) and a raft of global PMIs will provide fresh reads on the growth outlook, while Australia’s Q2 CPI (YoY consensus: +2.2%) will be closely watched for RBA implications.
Euro area CPI (Germany Jul YoY consensus: +2.0%, EU Jul MoM prior: +0.3%) and French CPI (Jul prior: +1.0%) will offer updates on price pressures, adding context to the ECB’s latest inflation expectations survey. US personal income (consensus: +0.2%) and spending (consensus: +0.4%) data, will be key for assessing consumer resilience.
Japan’s industrial production (Jun P consensus: -0.7% MoM) and jobless rate (Jun consensus: 2.5%) will help gauge the strength of Asia’s largest economies, alongside China and Japan PMIs for July. Australia’s retail sales (Jun consensus: +0.3%) and building approvals (Jun consensus: +2.9%) round out a busy calendar.
AUD/USD stays stronger
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 29 July – 2 August
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
