The US dollar strengthened this week, supported by new tariffs and resilient job data. The euro slipped below $1.17 as EU-US trade talks stalled. The yen weakened after Trump announced a 25% tariff on Japanese goods. The pound fell to $1.35 following weak UK GDP data, raising expectations for another Bank of England rate cut.
Gold settled at $3,350 as investors sought safe-haven assets following President Trump’s new tariff threats and calls for aggressive Federal Reserve rate cuts. Silver climbed to $38, driven by trade concerns, though gains were limited by a firm US dollar. Brent crude rose on improved demand and higher Saudi exports, but oversupply worries remain in focus.
In fixed income, the US 10-year Treasury yield increased to 4.41% after the latest tariff announcements. Japan’s 10-year yield reached 1.52% as trade tensions between Tokyo and Washington escalated. Meanwhile, Germany’s 10-year Bund yield rose to 2.68%, pressured by EU tariff risks and record government spending plans.
The Reserve Bank of Australia kept its cash rate at 3.85% in July, defying expectations for a 25bps cut. The decision passed with six members in favor and three against. The RBA cited balanced inflation risks and labor market strength but remains cautious amid demand and supply uncertainties. Policymakers will wait for more data to confirm inflation is on track to the 2.5% target. The board stressed readiness to respond if global developments significantly impact the domestic economy.
The Reserve Bank of New Zealand held its Official Cash Rate at 3.25%, the lowest since August 2022, in line with expectations. The MPC pointed to near-term inflation risks and uncertainty, choosing to wait for more data before acting. Inflation hit 2.5% in Q1, within the 1–3% target range, but is expected to rise toward the upper band before easing. New Zealand’s GDP contracted 0.7% in Q1, slightly better than expected, though recovery remains slow.
Germany’s inflation eased to 2% in June 2025, the lowest in eight months, matching the preliminary estimate. Energy prices fell 3.5%, driven by declines in motor fuels (-4.6%) and household energy (-2.8%). Food inflation slowed to 2% from 2.8%, while services prices rose 3.3%, led by transport services (+11.4%) and insurance (+8.1%).
US initial jobless claims fell by 5,000 to 227,000 in early July, the lowest in seven weeks. Continuing claims rose by 10,000 to 1.965 million, the highest since 2021, indicating slower hiring. Federal employee claims dropped by 15 to 438, tying for the lowest since December 2024.
The UK economy grew 0.7% in Q1 2025, matching the preliminary estimate and marking the strongest growth in a year. Services rose 0.7%, led by administrative support (3.7%) and retail (1.6%). Production climbed 1.3%, with transport equipment up 2.8%. Business investment rose 3.9%, and exports grew 3.3%. Household consumption increased 0.4%, while public spending fell 0.4%. Year-over-year GDP rose 1.3%.
The US dollar index is set to end the week near 98, up almost 1%, supported by new trade tensions. Trump announced a 35% tariff on Canadian imports and plans for 15–20% tariffs on other partners, including Japan and the EU. The administration also imposed 50% tariffs on copper and Brazilian goods. Chicago Fed President Goolsbee rejected the idea of using rate cuts to manage debt, reaffirming the Fed’s inflation mandate.
The euro slipped below $1.17 as trade talks with the US stalled. Despite this, the euro is still up nearly 13% YTD. The ECB is expected to hold rates steady but may cut again this year.
The yen weakened to a three-week low after Trump’s 25% tariff decision on Japanese goods. A Japanese think tank warned this could cut Japan’s GDP by 0.8% in 2025.
The pound fell to $1.35 after UK GDP contracted for the second month in May. Despite a trade deal with the US, recession concerns are growing. The BoE is expected to cut rates again in August.
Gold rose to $3,350 this week, supported by safe-haven demand as Trump announced sweeping tariffs. His call for a 300 bps Fed cut also fueled inflation worries. Jobless claims continued to decline, reinforcing labor market strength, but markets still expect two Fed cuts this year.
Silver surged above $38, a 13-year high, driven by trade tensions and tariffs on metals including copper.
Brent crude gained on strong summer demand and record Saudi shipments to China. However, oversupply concerns persist as the IEA raised supply forecasts and OPEC+ considers boosting output. Longer-term, OPEC lowered demand forecasts amid slowing Chinese growth and Trump’s threats of new sanctions on Russia.
US stocks declined as tariff concerns dominated markets. The Dow fell 1%, the S&P 500 dropped 0.4%, while the Nasdaq gained 0.1% on tech strength. Nvidia rose 5%, Google added 1%, but Tesla slid 2.5%.
Global markets ended the week on a positive note as soft U.S. economic data and cooling inflation raised expectations for a September Federal Reserve rate cut. The euro recovered on steady inflation and ECB easing prospects, while the pound remained resilient despite weak UK labor market data.
UK Wage Growth Holds Steady, Public Sector LeadsUK wage growth held steady in the three months to June 2025, with regular pay excluding bonuses rising 5 percent year-on-year to £679 per week, according to data from the Office for National Statistics (ONS). The pace matched the previous period and market expectations, remaining at the slowest rate in nearly three years.
Detail Trump-Putin Talks Drive Rate Cut Bets (08.12.2025)Traders await Trump-Putin talks, US CPI data, and central bank signals, with major currencies, gold, and silver seeing measured moves.
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