Minneapolis Fed President Neel Kashkari signaled caution, stating that the economy is slowing and policy adjustment could soon be necessary. San Francisco Fed’s Mary Daly warned it may take six months or longer to assess the inflationary effects of White House tariff hikes. Meanwhile, President Trump threatened to raise tariffs on imported semiconductors to 100%—but domestic producers would be exempt, though the details remain undefined.

Eurozone: German Exports Rise, but Industrial Production Drops Sharply

The euro is slipping against the pound and trading mixed versus the yen and dollar. June data out of Germany showed export growth of 0.8%, outpacing the 0.5% forecast, while imports soared 4.2% against expectations of 1.0%. This cut the trade surplus from €18.6B to €14.9B. However, industrial production fell 1.9%, marking its lowest level since 2020, highlighting persistent external demand weakness and intensifying competition from China.
Analysts see this as a warning sign for the broader eurozone economy and expect mounting pressure on the European Central Bank to consider further monetary easing.

United Kingdom: BoE Cuts Rates as Pound Strengthens

The British pound is outperforming the euro, yen, and dollar after the Bank of England cut its policy rate by 25bps to 4.00%. The vote was split—five policymakers favored a cut, while four preferred to hold rates steady, citing persistent inflation risks. The BoE's Monetary Policy Committee reaffirmed its commitment to curbing inflation, targeting a 2.0% medium-term objective. Governor Andrew Bailey emphasized a cautious approach, warning against rapid or excessive easing, while expressing optimism that the recent inflation uptick would not prove lasting.

Japan: Yen Slips on Cautious BoJ and Weak Wage Growth

The yen is weaker against the pound and trading mixed with the euro and dollar. With no major domestic macro data, recent government comments indicate the Bank of Japan does not foresee significant inflation risks. Having previously pushed inflation above 2.0%, the BoJ now aims to stabilize price growth. Absent further action, real wage declines could persist, constraining domestic demand and growth.

Australia: Trade Surplus Widens, Dollar Strengthens

The Australian dollar is up against the yen, euro, and US dollar, but down versus the pound. June trade figures showed exports rising 6.0% (vs. a previous –3.0%), while imports fell 3.1% (after a prior +3.3%), widening the trade surplus to A$5.4B. Yet, trade tensions remain a risk. Health Minister Mark Butler warned about US President Trump's threat to hike pharmaceutical tariffs to 250%, highlighting risks to biotech leader CSL Limited. Pharmaceuticals are a key Australian export to the US, totaling over A$2.1B last year.

Oil: Market Calm as Geopolitical Focus Shifts

Oil prices remain range-bound amid speculation about a potential face-to-face meeting between US President Trump and Russia’s Vladimir Putin next week. Markets interpret this as a sign that a Ukraine conflict settlement could be in sight. A deal could lift some sanctions on Russian oil exports, increasing supply and capping prices. Meanwhile, US EIA data showed a drop in crude inventories by 3.0M barrels, gasoline by 1.3M, and distillates by 0.6M barrels—supporting market balance.