Eurozone

The euro weakened against the yen and traded with mixed dynamics against both the pound and the dollar. The European Central Bank (ECB) released its quarterly lending survey, showing sustained demand for corporate loans despite persistent geopolitical and trade tensions that continue to weigh on the region’s economic outlook. Most banks anticipate further loan growth in the coming quarter, though the sector remains wary of potential new US tariffs. According to CNBC, Brussels is preparing a counteroffensive should trade talks with Washington fail, considering measures under its Anti-Coercion Instrument (ACI), which could exclude American firms from public tenders and impose new tariffs on both goods and services from the US. Experts note this could directly impact major US tech and service providers, including Amazon, Microsoft, Netflix, and Uber. If approved, these measures would remain in force until American tariffs are rolled back.

United Kingdom

The pound lost ground against both the yen and the dollar, while trading mixed versus the euro. New June data showed UK public sector borrowing reached £20.68 billion, exceeding forecasts (£17.40 billion) and last month’s figure (£17.44 billion) amid surging inflation. Debt servicing costs hit £16.4 billion, the third-highest monthly total since records began, which could prompt Chancellor Rachel Reeves to consider further tax increases.

Japan

The yen strengthened against major peers—the euro, pound, and US dollar—despite the lack of significant domestic economic releases. Market participants continue to assess the implications of recent parliamentary elections for Bank of Japan policy. Higher government spending could fuel inflationary pressure, but ongoing political instability and trade conflict with the US may slow the Japanese economy, increasing the case for additional stimulus. Focus now turns to the Bank of Japan’s core CPI report due Wednesday, expected to show inflation at 2.5%, above the central bank’s target.

Australia

The Australian dollar weakened against the yen and traded mixed against the euro, pound, and dollar. Minutes from the Reserve Bank of Australia (RBA) indicated that most board members see the current 3.85% interest rate as moderately restrictive. While policymakers believe further cuts would not align with a gradual easing strategy, markets currently price a 91% probability that the RBA will lower rates at its next meeting on August 12.

Oil Market

Crude oil prices remain under pressure, facing headwinds from both uncertain US trade policy and fundamental supply-demand dynamics. Investors are wary of the global growth outlook as the US prepares to impose fresh tariffs on August 1. Upcoming nuclear negotiations between Iran, the UK, France, and Germany could lead to the easing of sanctions and a subsequent rise in Iranian oil exports, increasing global supply. The latest weekly report from the American Petroleum Institute (API) is due today at 22:30 (GMT+2); last week’s sharp inventory build of 19.1M barrels fueled further selling. Continuation of this trend could accelerate bearish momentum in the oil market.