The US dollar index rose to 99 this week, up 0.8% on strong data and fading Fed cut bets. The euro stayed below $1.17, while the yen hit a 15-week low near ¥148 on fiscal worries. The British pound dropped 0.5% to $1.34 after weak UK GDP data and rising BoE cut expectations.
Gold held near $3,350 as Trump announced a 35% tariff on Canadian goods and pushed for a 300 bps Fed cut, raising inflation concerns. Silver climbed past $38, a 13-year high, as tariff fears increased safe-haven demand.
Brent crude fell to $68, pressured by higher supply forecasts from the IEA, weak China data, and new US sanctions on Russia.
The US 10-year yield neared 4.43% after Trump’s tariffs on Canada, Brazil, and copper. Japan’s 10-year yield rose to 1.53% as tariffs fuel slowdown fears. Germany’s 10-year Bund yield hit 2.68%, with markets awaiting US-EU tariff announcements. The ECB is expected to hold rates for now but may cut later this year.
China’s economy expanded 5.2% year-over-year in Q2 2025, slightly below Q1’s 5.4% but above the 5.0% forecast. Growth was driven by strong manufacturing and front-loaded exports ahead of expiring tariff exemptions. However, domestic demand remained uneven, with modest gains in retail sales and fixed asset investment. The data highlight a fragile recovery amid global trade risks and deflationary pressures.
US headline CPI rose 0.3% in June, while core CPI increased 0.2%, both slightly below expectations. Year-over-year inflation climbed to 2.7%, up from May’s 2.4%, reflecting persistent pressure from energy and services despite disinflation in shelter and used cars. Markets still expect two Fed rate cuts this year, though the timing remains uncertain.
UK inflation rose to 3.6% in June from 3.4%, exceeding expectations. Higher food and services prices drove the increase, keeping inflation well above the BoE’s 2% target. Although markets still price in at least one rate cut this year, sticky inflation may force the Bank of England to proceed cautiously due to weak growth indicators.
Euro area inflation reached 2.0% year-over-year in June, slightly above May’s 1.9% and in line with forecasts. Energy prices stayed low, while service costs continued to rise. The data support the ECB’s decision to hold rates steady for now, though growth concerns keep the outlook uncertain.
US retail sales rose 0.6% in June, beating forecasts and rebounding from May’s -0.9% decline. Core retail sales, excluding autos and gasoline, increased 0.5%, signaling resilient consumer spending. This supports the soft-landing view and lowers the urgency for near-term Fed rate cuts.
US initial jobless claims dropped to 221,000 for the week ending July 12, below the expected 233,000 and down from 228,000 previously. Continuing claims also fell, indicating a still-strong labor market. The data give the Fed more flexibility to delay rate cuts.
The US dollar index climbed to 99 this week, up 0.8%, supported by strong US data and rising Treasury yields. The euro held below $1.17 as CPI rose to 2.0% in June, matching the ECB’s target but unlikely to alter near-term policy. The Japanese yen weakened to a 15-week low near ¥148 due to pre-election spending plans and stronger US data. The British pound dropped 0.5% to $1.34 after weak UK GDP and labor market data, reinforcing expectations of a BoE rate cut in August.
Gold slipped to $3,350 per ounce this week as strong US data and a stronger dollar pressured prices, though safe-haven demand persists. Silver stayed above $38, supported by industrial demand and Chinese manufacturing stimulus. Brent crude declined to $68 per barrel as the IEA raised supply forecasts, OPEC+ considered production hikes, and China’s growth slowed, while new US sanctions on Russia added to market concerns.
The Dow Jones Industrial Average rose 0.2% this week, led by bank stocks and positive industrial sector guidance. The S&P 500 gained 1.5%, closing at a new record high, driven by large-cap technology and consumer discretionary strength.
US Starts Q3 Strong, Sectoral Gaps WidenIn July, the US economy maintained its expansion, signaling a solid start to the third quarter.
Detail Strong Jobless Claims Hit Euro and Gold (07.25.2025)Markets shifted slightly on Friday as strong U.S. labor data and easing trade fears influenced sentiment across major assets.
Detail
EU & US Are Near Trade Deal with 15% Tariff Ahead of August DeadlineThe European Union and the United States are moving closer to finalizing a trade agreement that would impose a 15 percent tariff on most goods, according to diplomatic sources familiar with the talks. The development has strengthened market sentiment and eased fears of an escalating transatlantic trade conflict.
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