We expect the Bank of Canada to maintain interest rates at 2.75% on 30 July, remaining cautious amid trade uncertainty. But one or two additional cuts later in the year remain quite likely, and we think market pricing is too hawkish. We continue to expect some pressure on the Canadian dollar on the back of worsening domestic drivers
The ECB has kept its policy interest rates on hold and is waiting for the final showdown in US-EU trade negotiations
Consumer confidence gained in July, surpassing market expectations with the strongest reading since September 2021. Business confidence hovers just below its long-term average, though we expect the mood in industry to improve over the coming months. Robust recovery implies the need for a tighter monetary policy setup in the future
April's hike in UK payroll taxes and the National Living Wage are squeezing hiring but keeping pressure on inflation. We think the former is a bigger concern than the latter, but for now the bar for faster Bank of England rate cuts appears high. We expect cuts in August and November
The composite PMI increased from 50.6 to 51 in July. With uncertainty all around, an economy showing slight growth, increasing employment and weak inflation sounds surprisingly benign
A US-EU deal is reportedly imminent and should follow the US-Japan 15% tariff blueprint. The ECB should anyway tread carefully and offer no new guidance, but comments about the euro’s strength can be read as dovish. We think EUR/USD may be close to a peak and we favour a correction in the near term. The yen’s rally also appears to have gone too far
The yen has continued to strengthen overnight, remaining the best performer in G10 since the start of the week, up 1.8% against the dollar. The US-Japan trade deal is seemingly reinforcing market expectations on a Bank of Japan rate hike by the end of the year, which is now 20bp priced in, up from 16bp earlier this week and a 10bp low earlier in July.
While the market may not be surprised by the European Central Bank holding rates, the debate about a September or December cut remains very much alive, although we may not get an answer yet. Markets have been firmly convinced of an ECB landing zone at 1.75%, but a weak PMI reading combined with a setback in trade negotiations could challenge this
South Korea’s real GDP rebounded 0.6% in the second quarter, after shrinking in the January-March period, led by consumption and exports. Consumption is expected to take the lead as main growth driver in the second half thanks to supportive macro policies. Yet the timing of a Bank of Korea rate cut depends on housing prices and a trade deal
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European markets have opened to news of a US-Japan trade deal. Equity markets globally are rallying on the view that deals reduce uncertainty. The yen, however, is less certain of what this all means – especially given the prospect of an imminent resignation from PM Ishiba. Elsewhere, commodity currencies continue to do well as industrial metals rally
China's exports held up well in the first half of 2025 as shipments to other regions offset the drag from the US, resulting in net exports contributing 1.7pp to 1H25 GDP growth. We could see more strains ahead if tariffs rise anew and re-exports are targeted. But China’s competitiveness in key sectors and in other markets should limit the downside
News of a US-Japan trade deal, though details remain vague, sent equities higher, with the Nikkei rising 3.5% during the morning session. However, the USDJPY and Japanese government bonds declined as fiscal concerns and reports of Prime Minister Shigeru Ishiba stepping down soon
South Korea’s consumer sentiment index improved for the fourth straight month. It also suggests a moderation of housing prices, which should offer relief to the government and the Bank of Korea
Oil prices edged lower yesterday as tariff concerns linger with the 1 August deadline fast approaching
Today, in addition to monthly data from Poland, the main event is the rate decision of the National Bank of Hungary (NBH). Rates are likely to remain unchanged at 6.50% again, with the focus more on the tone of the press conference. June headline inflation was one-tenth above the NBH forecast, but underlying momentum seems to be seeing some gradual improvement. At the same time, the economy continues to surprise on the downside.
Markets may become more nervous with the 1 August tariff deadlines, and low summer liquidity could amplify rate moves. Fiscal concerns in many large economies add to the volatility from the back end of the curve. Challenges to the Fed's independence are also not helping US rates
Markets’ defiant approach to tariff news will be tested in the coming days as the risk of no trade deals before the 1 August deadline rises. The consensus view is probably that the dollar can lose more ground on a higher average US tariff rate, but the euro’s ability to benefit from it may depend on whether the EU gets sucked into a major tit-for-tat escalation
Global uncertainty hasn't affected loan demand or credit standards too much in the second quarter, which means that the outlook for investment is not currently deteriorating. Then again, this still gives us a view of investments muddling through
Expected softness in GDP growth in the second half of the year, ongoing tariff uncertainties, and currency overvaluation support the case for MAS easing, though the decision remains finely balanced
We expect a hold by the ECB on Thursday, but there are risks of a modest dovish tilt given tariff uncertainty and the euro’s recent strength. Ultimately, Fed decisions will drive EUR/USD more than the ECB’s, but signs of discontent with levels above 1.20 can cap the euro’s short-term gains. Expect rates to be particularly sensitive to trade comments
Real retail sales fell short of our and market expectations, but the overall picture for private consumption is still stronger than observed in Q1. Economic growth improved despite soft external demand due to domestic factors. We estimate 2Q25 GDP growth at 3.5% vs. 3.2% posted in the previous quarter, and see the Polish economy rising by 3.5% in 2025
Central banks just love to cut rates in gradual, 25 basis-point chunks, don't they? Nobody knows why. And frankly, it doesn’t always make much sense, writes James Smith. Should the ECB cut rates next week? And should the Fed and BoE speed things up?
Oil prices showed little reaction to the EU’s latest sanction package against Russia. However, it could lead to further tightening in the European middle distillates market
We would not read too much into the marginal strengthening of the yen after Sunday's Upper House election result in Japan. Uncertainty is certainly on the rise here. For the week ahead, we have rate meetings in the eurozone, Hungary and Turkey, plus new business confidence readings in Europe. A new dam project in China also looks exciting for commodity FX
June’s wage growth surprised to the upside, and readings from both industry and construction brought few signs of any further acceleration for economic growth. Wage increases were mainly due to one-off payments in the mining and energy sectors, and shouldn't prevent further rate cuts over the coming quarters as inflation sees a substantial moderation
This Sunday's Upper House elections in Japan are weighing on Japan's government bonds and the yen. Fears of political uncertainty, looser fiscal policy and also the effects of earlier BoJ policy normalisation have all contributed to JGB weakness. Here, we look at what's at stake and how markets might react
Next week we have the European Central Bank meeting, although no rate cut is anticipated. Markets are still split about when the next cut will take place, so the ECB will likely give more guidance in due time. More important for euro rates may be the PMI numbers. A continuation of upside economic data surprises opens the door to higher longer-dated rates
Retail sales and jobless claims were better than expected yesterday, offering more support for a hawkish rethink of Federal Reserve rate cuts. We expect the residual 14bp priced in for September to be gradually reduced and add pressure on EUR/USD. Elsewhere, Japan’s election on Sunday might trigger a break above 150.0 in USD/JPY
Since reaching a record high above $3,500/oz in April, the gold rally has stalled, and is need of a fresh catalyst to help push it higher
Passing the new budget through the French parliament may prove difficult and generate more rates volatility. EGB spreads look tight given defence spending ambitions. US Treasuries yields decide to test the upside, and for good reason we think
Yesterday’s US inflation failed to validate dovish bets on the Fed and triggered a bounce in the oversold dollar. We see more room for hawkish repricing in the coming weeks, and accordingly, upside risks for USD. Today, the US PPI and the Fed Beige Book are in focus. In the UK, services CPI came in hotter than expected, but tomorrow’s jobs data will be key for GBP
Oil prices edged lower yesterday, with a stronger US dollar providing headwinds for the market
Since early 2023, countries in Southern Europe have seen strong declines in unemployment, while those in the north have seen increases. This is helping eurozone convergence, adding to tighter government bond spreads in the eurozone, and is ultimately making life easier for the European Central Bank
Yesterday's US inflation data was... mixed. Headline CPI rose 0.3% month-on-month, exactly as expected, pushing the annual rate up to 2.7% from 2.4% in the prior month. But core inflation came in softer than anticipated, briefly lifting market sentiment.
Industrial producer prices extended the series of declines by another month in June, coming in below expectations. That said, consumer goods prices in the industrial segment accelerated, while animal production pricing in agriculture remained robust
Romania has launched a bold fiscal overhaul to fix its record deficit by raising taxes and curbing spending. The short-term hit to growth and inflation will be significant, but the plan could also restore stability, unlock EU funds, and rebuild investor trust
In May, real wage growth reached its historical average, which appears weak compared to the double-digit increases seen in previous years. This could potentially harm households' perception of their financial situation and, as a result, diminish consumer confidence
Bank Indonesia’s rate cut today surprised markets, but the overnight announcement of a trade deal with Indonesia by President Trump likely provided the confidence needed to proceed without delay. We continue to anticipate an additional 50 basis points of rate cuts by the first quarter of 2026
Having gapped 0.3% lower in Asia on news of a potential 30% US tariff on EU imports, EUR/USD is now barely 20 pips down on Friday's close. These kinds of threats seem typical as President Trump tries to get new deals over the line. We expect a better deal for Europe than this, but it could be noisy ahead of 1 August. Elsewhere, look out for new sanctions on Russia
The outlook for the chemicals sector in the Netherlands remains bleak. American import tariffs have impacted a sizeable portion of production, while structural issues such as global overcapacity and declining competitiveness continue to constrain its growth potential
At first glance, a 27.3% YoY YTD uptick in aggregate financing looks like cause for celebration, but a closer look shows that this is primarily driven by increased government bond issuance. A much more modest 2.3% YoY uptick in new RMB loans shows that credit demand has remained sluggish despite rate cuts amid weak confidence and heightened uncertainty
Financial markets continue in their glass half full view of the world as tariff deadlines get pushed back again. The dominant theme for this quarter we believe will be resurgent US inflation and a Fed resisting heavy political pressure to cut rates. This can deliver some brief respite to the dollar
Recent Philippine data indicates that external trade made a stronger contribution to GDP in 2Q. However, the cautious pace of private investment may remain a drag on overall performance unless government spending accelerates. We maintain our forecast for two additional 25-basis-point rate cuts by year-end, bringing the policy rate to 4.75%
The week starts with renewed pressure on oil prices as OPEC decided to ramp up its production restoration plans by announcing an additional 548,000 barrels per day—well above the 411,000-increase expected. Members also said they will do the same at their September meeting. Hence, the 2.2mbpd restriction that was put in place in 2023 will be fully restored a year earlier than initially planned.
Industrial data from May suggests that there is more to German industry than just US front-loading. It's too early to give the all-clear, but signs of at least a cyclical rebound, albeit from low levels, are increasing
FX markets are preparing for a noisy week on trade. Wednesday's expiry of the 90-day tariff deadlines will once again see some high tariff levels thrown around. This has the potential to upset the benign volatility conditions seen over the last two months, although the fallout should be nowhere near the levels seen in April. The dollar can probably stay soft
The -0.7% month-on-month decline in retail sales coincided with a -0.3% decline in overall services activity in April. While surveys had previously indicated potential weakness in eurozone services for the second quarter, this concrete data confirms our expectations that GDP growth between April and June may have been negative
May retail sales data was disappointing. Most sectors saw significant monthly declines, clearly showing that the strong increase in the previous month was a one-off
The President of the National Bank of Poland first called yesterday's cut as an adjustment of rates, not the beginning of a cycle of cuts. Finally, he signalled a September cut with the target rate seen in the range of 3-3.5%. We see a 50 basis point cut in September and a target rate of 3.5% in 2026
Persistent inflation is continuing to ease, while the global growth outlook remains uncertain. This gives the RBA another opportunity to lower rates next week. We also add another rate cut to our profile for 2025, taking the terminal cash rate to 3.1%. A more dovish RBA can hinder AUD gains in the crosses, but AUD/USD remains primarily a US and tariffs story
Next week's highlights are monetary policy decisions in Australia and South Korea. In addition, China and Taiwan will release inflation data, while Taiwan publishes trade data. Singapore will report its flash estimate for second-quarter GDP
In spite of a better-than-expected US June jobs report and a 10/12bp jump in short-dated US interest rates, the dollar is barely changed from its soft levels seen this time yesterday. Seemingly, the threat of more tariff-induced FX volatility next week is keeping the outlook fragile. Elsewhere, we think the Polish zloty stays soft on a dovish central bank
The Big Beautiful Bill passed in US Congress, putting even more pressure on the fiscal outlook and thus longer-dated USTs. US payrolls came in better than expected, contributing to higher yields across the curve. The ECB minutes show more members are concerned about undershooting inflation, keeping the 1.75% market-implied landing zone firmly intact
French industrial production fell again in May, reinforcing the likelihood of a contraction in GDP in the second quarter. The outlook for the rest of the year remains bleak
US President Donald Trump’s 90-day trade reprieve is ending. Tariff noise is back, but does it really matter? US inflation has stayed surprisingly benign and the economy is holding up, despite the rollercoaster so far. But expect that to change, writes James Smith, as he and the team tackle another big week in the world of macro and markets
A stronger-than-expected June jobs report indicates no Federal Reserve rate cut before September despite the President’s demands. Nonetheless, households are becoming more pessimistic on employment prospects with the risk of layoffs rising in the second half of the year
UK markets are beginning to price in the possibility that a new Chancellor could change the fiscal rules and loosen Britain's purse strings, at a time when annual debt issuance is already perilously high. That seems like a bit of a leap at this stage, but once again, Gilts are dragging UK asset markets lower
Payrolls day remains the most important one for markets. Even going into most pivotal Fed meetings we typically know what's going to happen. For payrolls, we think we know. And even if we did, the print itself can have a perverse effect. The big fear is we get a really bad one sometime soon. Feeling bullish? Fair. But, weak payrolls also means a higher deficit
The trade deal between the US and Vietnam boosted oil prices. However, with OPEC+ set to decide on August output levels, the move higher could be short-lived. In addition, 9 July marks the end of the 90-day pause in US reciprocal tariffs, leaving further uncertainty
Today's FX market focus is squarely on the June US jobs report. Does a consensus +110k release provide cover for Fed Chair Powell to continue resisting pressure to cut rates? Or will a weak number put a July rate cut squarely on the table? We think it's too early to say that we've reached 'peak bearishness' on the dollar – but the jobs data will set the tone
Vietnam is the first Asian country to secure a trade deal with the US, avoiding punitive 'reciprocal tariffs'. While higher tariffs on value-added exports and potentially significant transshipments could hurt GDP growth, favourable tariff differentials might accelerate the supply chain shifts Vietnam has been benefiting from
The just-released minutes of the European Central Bank's June meeting show that most ECB members were concerned about a possible inflation undershoot. Important to stress 'most', but certainly not all
Is the first CNB rate hike closer than we think? Friday's inflation data poses an upside risk but the market remains unfazed. The CNB could easily find itself in a situation where inflation stays above 3% for a longer period, and neither the central bank nor the markets are prepared for it. The discussion could quickly change from whether we will see another CNB rate cut to when we will see the first rate hike
Czech PMI flips into expansion zone. The manufacturing PMI entered expansion territory in June, coming in stronger than market participants had expected. This is a welcome change, as the index had remained below the neutral threshold for three consecutive years. We see potential implications for rate-setters if the rebound gains pace and proves sustainable, as the economy picks up speed
Asia's manufacturing PMI improves, but trade risks are looming. Manufacturing PMI improved for Asia in June, reflecting a slightly positive business sentiment and helped by a massive reduction in tariffs on China in May. However, looking ahead, we expect Asia export growth to slow, resulting in softer manufacturing and overall GDP growth
US manufacturing continues to struggle, amidst signs of jobs resilience. The ISM manufacturing index remains in contraction territory, but the job vacancy statistics are holding up fairly well and inflation pressures remain elevated. Fed Chair Powell, speaking in Portugal, continues to suggest the committee remains in wait-and-see mode, implying little prospect of a July rate cut
Everything you need to know as we near the end of the US 90-day tariff pause. Starting at 12:01 AM EST on 9 July, reciprocal tariffs ranging from 11% to 50% will be reinstated unless formal trade agreements, such as the US/UK agreement, or high-level deals like the one between the US and China, are established. What can we expect regarding future trade deals, tariff rates, and the ongoing US/China dispute?
Eurozone unemployment rate edges up in May, but remains at historic low. The unemployment rate increased from 6.2% to 6.3% in May. This increase was mainly driven by a jump in unemployment in Italy, but overall, the labour market remains strong with significant shortages across the eurozone
FX Daily: Lacklustre dollar support into key events. Yesterday’s US data (JOLTS and ISM manufacturing) were stronger than expected, but this provided only limited support for a dollar still suffering from an asymmetrical negative bias. To watch today: ADP payrolls, Challenger layoffs, the Big Beautiful Bill heading for final House approval and Trump’s tariff threats ahead of the 9 July deadline
Rates Spark: Back end vulnerabilities. While there's been a material rate-cut-driven fall in US market rates, there are some risks ahead for longer tenor rates coming from inflation and the fiscal deficit. In the UK, a potential slowdown of the Bank of England's balance sheet could help keep longer-dated Gilt yields down, but the global environment is not conducive to this
South Korean inflation rises due to base effect, keeping BoK rates on hold next week. South Korean inflation rose in June, but remains within the Bank of Korea’s target range. We expect the BoK to leave rates unchanged until housing prices and increases in household debt stabilize
FX Daily: The search for dovish validation continues. Yesterday’s US data was a mixed bag, failing to unequivocally endorse the recent speculation on Fed rate cuts. Today, focus will be on the PCE, personal spending and more Fedspeak. EUR/USD has its sights on 1.20, but the path to get there remains very conditional on US-related factors
How President Trump's plans will impact the US deficit. Big isn’t beautiful when it comes to government debt, but tariffs and the Department of Government Efficiency (DOGE) help to plug the hole left by President Trump’s latest fiscal bill. The net effect will be weaker growth, with US government debt remaining on a worrying trajectory
The Czech economy expanded by a solid 2.4% annually at the beginning of the year. The real GDP revision supports our view that households remain on a spending spree, while firms remain reluctant to unleash investment and unlock future growth potential. Resilient spending will likely prevent any further monetary policy easing
Recent labour market data shows that demographic decline and voluntary exits are key factors to watch out for. Meanwhile, gloomy macroeconomic conditions are leading to redundancies and reduced employee bargaining power, potentially limiting future wage growth
FX Daily: Data holds the key to FOMC balance. We expect the dollar to become more sensitive to data in the near term, as markets seek a catalyst to double down on recent dovish Fed speculation. Employment figures may be subject to closer examination, with the rationale that a softer jobs market can convert a few hawks after mild inflation failed to do so. EUR/USD continues to face upside risks
Asia week ahead: data to show uptick in inflation in South Korea and Indonesia. CPI data will be released in Indonesia, the Philippines, and South Korea next week. A rise in inflation is expected, driven by higher oil prices. Elsewhere, China is set to release its PMI and new export orders, while Japan will publish the Tankan survey and industrial production data
The dollar's bearish march has continued after the Middle East crisis brought scattered, short-lived support. EUR/USD has broken 1.170 and is setting its sights on 1.20. The recent short-term rate swings have increased the upside risks, but something needs to happen on tariffs, Treasuries or the Fed for a run to 1.20
In the potential absence of federal government incentives, enhancing revenues and reducing costs is key to many clean technology developers weathering the new political environment
Iran and Israel have agreed to a ceasefire, and markets had already started pricing out geopolitical risk yesterday as Iran’s retaliatory strikes against the US appeared measured in size. The dollar is facing fresh pressure on the back of plummeting oil prices, and downside risks for USD remain elevated ahead of Fed Chair Powell's testimony later today
Is this wishful thinking or a fundamental change? Germany's most prominent leading indicator increased for the sixth consecutive month on hopes that fiscal stimulus will boost growth
Taiwan's industrial production growth was 22.6% YoY in May, beating forecasts for yet another month.
Increased defence spending by European countries will hit households hard. We're not overly convinced by the positive effects on GDP growth. But if Europe works more closely together, member states could significantly mitigate the downside. It's another challenge for NATO members, currently meeting in the Hague
Retail sales of goods at constant prices increased by 4.4% year-on-year in May (ING: 5.2%; consensus: 4.3%), following an impressive April (partly due to calendar effects), when retail sales growth reached 7.6% YoY, the highest in nearly three years.
US strikes on three nuclear facilities in Iran: What it means for macro and markets. While the broader impact of the US strikes on Iran’s nuclear facilities remains uncertain, markets have so far responded with caution. What is clear, however, is that the strikes are likely to heighten economic uncertainty and put upward pressure on oil prices.
Eurozone PMI stagnates, with Middle East conflict adding to downside risk. The eurozone composite PMI came in at 50.2 in June – similar to May – indicating a stagnating economy after a robust first quarter. Concerns about escalation in the Middle East add a new downside risk to the growth outlook
May's national economic data has fallen short of consensus expectations. The anticipated recovery remains elusive, although the available data does not include the performance in services and SMEs. The data supports further rate cuts by the National Bank of Poland, but the Middle East conflict complicates July's monetary policy easing
We panicked prior to the tariff pause in April as US Treasuries behaved like a risky asset under pressure. There was lots of speculation as to who was selling and how heavy it was. We'll know more soon. But as we get the data, remember that large dips negative in these data are typical. If we were to get that, we'd really need to see the May data before extrapolating
Energy markets continue to monitor escalating Israel-Iran conflict, focusing on any signs that Iran may seek to disrupt crude flows across the Strait of Hormuz
The initial CSRD reporting discrepancies hinder comparison. Despite that, we derive several highpoints, for example, some corporates found materiality in all ESRS topics, while none of the banks did. Improvements could be expected as reporting experience grows, but the sustainability Omnibus adds uncertainty to this messy start.
Bank Indonesia (BI) held its policy rate at 5.5%, citing global economic conditions and Indonesian rupiah stability. Despite tariff uncertainties and geopolitical tensions, BI hinted at rate cuts later this year to boost growth
In June's edition of our latest FX views and forecasts, we're focusing on why EUR/USD may not need to rush higher in the near term, how the yen remains an attractive bet in the longer run, and how domestic factors can start to take a more central role in FX now that markets are becoming accustomed to a weak dollar environment
Risk has calmed and Treasury yields are edging higher again, as we head close to a big Wednesday (FOMC, TIC data and 20yr auction). In the eurozone, the 10y EUR swap rate remains confined to its 2.4% to 2.6% range as the Israel/Iran conflict only adds to a long list of uncertainties while at the front-end energy price risks keep the ECB on edge
CZK Poised to Gain as CNB Enters Blackout, Eyes on Hungary’s Budget Vote
The main story in FX remains the rapidly evolving Middle East conflict. If oil prices correct further due to perceived limited supply risk, the dollar can follow suit and move lower. However, some USD-supportive trade news may emerge from the G7 summit in Canada. Elsewhere, the Bank of Japan kept rates on hold, with the yen muted on hawkish signals
