Headwinds for the euro also came from disappointing Italian industrial output—down 0.7% MoM and -0.9% YoY versus market forecasts. On the policy front, EU-US tariff negotiations remain unresolved, with Bloomberg reporting a likely temporary 10% tariff until at least August 1. Meanwhile, the White House threatened up to 50% tariffs on European goods, potentially derailing planned investments in defense and infrastructure. In the US, weekly jobless claims fell for the fourth straight week, hitting 227,000 and lowering the four-week average to 235,500, supporting the dollar.

GBP/USD

Sterling remains range-bound near 1.3540, as UK macro data comes in mixed. GDP contracted 0.1% in May (vs. -0.3% previously and 0.1% growth forecast), and industrial production slid 0.9% MoM—faster than April’s -0.6% but below consensus. On a YoY basis, output declined -0.3% versus a previous +0.3%. The Bank of England’s biannual Financial Stability Report cited ongoing risks from geopolitical tensions, fragmentation in global trade and finance, and rising sovereign debt loads. Of note: the US moved the tariff deadline to August 1, and only the UK managed to lock in a 10% import duty. Broader sanctions on British steel and aluminum remain in effect.

AUD/USD

The Australian dollar posted its strongest rally in weeks, riding momentum from a surprisingly hawkish Reserve Bank of Australia (RBA) meeting. The RBA left its policy rate unchanged at 3.85% (6 votes to 3), signaling that inflation is contained and the labor market remains robust, but flagged risks from volatile US tariff policy. Markets now expect a 25bps rate cut in August, especially as the Fed holds steady amid White House pressure for more easing. Later today, attention turns to the US monthly budget statement—analysts forecast a sharp deficit reduction from -$316B to -$11B, which could bolster the greenback.

USD/JPY

The dollar consolidates around 146.20 versus the yen amid light macro flow. Japanese producer price data showed factory-gate inflation slowing to 2.9% YoY from 3.3%, the third straight month of deceleration but still above the Bank of Japan’s 2% target. This could justify a cautious stance on monetary tightening—some strategists now see the BoJ delaying its next hike until March 2026 if US-Japan tariff talks fail. Auto stocks remain under pressure as exporters brace for new US tariffs in August. All eyes are on the FOMC’s policy outlook and the US Treasury’s budget update later today.

XAU/USD

Gold prices are climbing modestly, consolidating above $3323.80 after rebounding from late June lows. Safe haven demand is fueled by persistent global uncertainty and shifting US tariff policy. President Trump delayed the final tariff deadline to August 1, with deals in place only with the UK and Vietnam—negotiations with China remain unresolved, despite prior progress on sanctions. Meanwhile, Washington has begun sending detailed tariff notifications to affected partners, ranging from 20% to 30% on key commodities, with targeted countries including Japan, South Korea, and several emerging markets. The US budget report later today could inject fresh volatility into dollar and gold prices if it signals faster fiscal improvement than markets expect.