July 07, 2025

“The market is fixated on trade right now, with some important dates coming up for US tariff policy. So far the messaging from the White House has been confusing, but it looks like we might get some further extensions to get deals over the line.”

Tim Hallinan – Trading Director

USD

This week is all about trade. A week after April 2^nd (‘Liberation Day’) and the huge tariff announcements that sent the market into meltdown, Trump’s 90-day reprieve managed to calm investors down as it appeared that the markets would keep him in check and that he would seek negotiated deals. That 90-day delay expires on Wednesday, and so far the US has only penned agreements with the UK, China, and Vietnam. For the rest of the US’ trading partners, the outcome is wide open. Communication over the weekend was disorganised, though it now seems that at least 10-12 countries are receiving letters with a new date: 1^st August. It is not clear whether this applies to all, or what the tariff levels will revert to if they cannot get deals over the line – Commerce Secretary Lutnick suggested that Trump was ‘setting the rates and the deals right now’. Trump himself suggested that some tariffs might reach 60-70%. Whatever the outcome, the dollar does not respond well to big tariffs. The data diary is relatively quiet, but there are some Fed meeting minutes on Wednesday and jobless claims on Thursday.

GBP

The pound continues to struggle since last week’s spotlight on the UK’s fiscal challenges, even as speculation has died down about the Chancellor’s job. The fear now is that tax rises are becoming somewhat inevitable as growth stalls and a Labour rebellion blew a £5bn hole in the budget. The focus this week will be on Friday’s GDP report, which is expected at 0.1% month-on-month after a -0.3% decline in April. If it meets estimates, there will need to be a strong pickup in June to avoid an overall contraction in the second quarter.

EUR

The euro will be dependent on the trade story this week. US-EU negotiations have failed to produce any major progress so far, meaning that Trump might either delay the tariffs for a few more months to give space to reach a deal, or whack them up in the hopes that it will push the bloc to give concessions. EURUSD could move in either direction depending on how events evolve, though a hard stance from the White House would likely be another reason for investors to sell the dollar. Today, we get some investor confidence and retail sales data this morning, alongside a speech from ECB hawk Holzmann, who has tended to push back against calls for further cuts.

Markets

The rise in equities has stalled in recent days as the focus has shifted to the nervous trade situation, with Europe taking a decent hit on Friday and futures pointing to a soft open across the board this morning.

Main Economic Events (All Times CET)

8:00am: Sweden CPIF Inflation
10:30am: Eurozone Sentix Investor Confidence & Retail Sales

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