Eurozone
The euro is soft against the yen but firmer versus the dollar and pound. July inflation data showed the CPI flat m/m (0.0%, down from 0.3%) and steady y/y at 2.0% (above 1.9% forecast); core CPI dipped to –0.2% m/m, staying at 2.3% y/y. Manufacturing PMI for the bloc ticked up from 49.5 to 49.8, while Germany’s slowed slightly to 49.1. Both remain in stagnation, reflecting the impact of US tariffs. Falling inflation and weak activity raise the odds of ECB rate cuts by year-end.
United Kingdom
Sterling is down against the euro and yen, but up versus the dollar. Manufacturing PMI edged up to 48.0 from 47.7 (missed 48.2 forecast), still in stagnation, but business leaders see hope as consumer goods output rebounds. July Nationwide data show house prices jumped 0.6% m/m (vs. –0.9% prior, 0.5% expected) and 2.4% y/y (vs. 2.1%), indicating property market recovery amid rising incomes and lower mortgage rates.
Japan
The yen is gaining against the euro, pound, and dollar. July manufacturing PMI dropped back into stagnation at 48.9 (down from 50.1), despite a new US-Japan trade deal that includes a 15% tariff on Japanese cars. Export-related profits may shrink, and companies plan to cut capital expenditures; management remains reluctant to raise prices, wary of weaker demand.
Australia
The Australian dollar is weaker against the euro and yen, but up versus the dollar and pound. Q2 producer price inflation eased to 0.7% q/q (3.4% y/y), confirming slower wholesale and consumer inflation and boosting expectations of further RBA rate cuts. July manufacturing PMI dipped from 51.6 to 51.3, but remains in expansion.
Oil Market
Oil prices are correcting lower after new US tariffs on key trading partners and weak jobs data reignited fears of an economic slowdown and weaker energy demand. However, the risk of new 100% tariffs on India and China for buying Russian crude could disrupt 2.75 million barrels per day in supply, potentially escalating tensions between major economies, according to JPMorgan estimates.