Morning Report
July 08, 2025
“Trump’s tariff letters have not upset markets too much, though the dollar is trading on the softer side this morning. US small business data is the main event today, ahead of the Fed meeting minutes tomorrow and UK GDP on Friday.”
Sam Cornford – Head of Trading
USD
The dollar has held up well even as Trump has been sending out letters with higher tariff rates to around a dozen countries. The figures include 25% on the likes of Japan, South Korea, South Africa, and Malaysia, plus up to 40% for Laos and Myanmar. Critically, however, the deadline has been pushed back to 1st August and it leaves room for deals to be struck in the interim. It is an attempt to ramp up the pressure and gain some leverage on the negotiating table. The tariff rollercoaster is to be expected by now, and things could be worse. It is the risk-sensitive currencies outperforming this morning, and equities are looking likely to recover from a brief drop yesterday. The main events today are the NFIB small business report, where the focus will be on growth and hiring going into the summer, and the NY Fed’s 1Y inflation expectations survey.
GBP
Sterling has been bouncing around in the 1.36-1.365 range for the past couple of days. The UK already has a deal with the US and the data calendar is relatively quiet until we get the GDP report on Friday, so external developments will likely dominate until then. It has gained slightly against a softer euro but has been unable to recover against the dollar since its drop last Wednesday.
EUR
The euro is up around 0.4% this morning after dipping to its lowest in 10 days yesterday afternoon. One of the main reasons is that, among all the letters and fresh threats, the EU’s fate is not yet known – it did not receive a new ultimatum. Reports are suggesting that the EU is pushing ahead with a deal and is willing to accept a 10% baseline tariff on its exports to the US. Things can move quickly, and Trump could become frustrated and change his mind, but the euro could receive a boost if a deal comes through.
Markets
The S&P 500 and the Nasdaq both fell 0.8% by the end of the session yesterday amid the torrent of tariff news, but futures are looking positive this morning.
Main Economic Events (All Times CET)
6:30am: Reserve Bank of Australia Rate Decision
12:00pm: US NFIB Small Business Index
5:00pm: NY Fed 1Y Inflation Expectations
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