Morning Report
July 09, 2025
“The markets are extremely cautious as they digest the daily headlines on US tariffs, but they have not spilled over into a dollar selloff like they did after the original ‘liberation day’. The Fed meeting minutes are the main focus today, alongside some ECB speakers.”
Tim Hallinan – Trading Director
USD
There are at least seven more letters going out to US trade partners, and it was warned yesterday that there would be ‘no more extensions’ to the reciprocal tariffs after 1st August. Trump also threatened tariffs of 50% on copper and up to 200% on pharmaceuticals. Although copper has shot up to record highs, the rest of the market has been cautious rather than panicked – investors are just not responding in the way they did back in April. There is an overarching feeling that the current threats are simply a way to ramp up the pressure at the negotiating table, though key officials have warned that the constantly changing threats tend to make the process more difficult. FX has been choppy but without any real direction so far this week. Today’s Fed meeting minutes may change this, however, where the key question is on the materiality of the dovish shift that we have seen from a couple of FOMC members in recent weeks. Are they on the fringes and trying to impress the president, or is there more widespread concern across the committee? This could move the dial for rates pricing and for the dollar.
GBP
Sterling is likely to remain choppy and dollar-focused until Friday’s GDP report. It fell 0.9% against a rising dollar in just a six-hour period yesterday, but it has recovered around 0.6% overnight. The Fed meeting minutes and the tariff headlines, particularly with regards to the EU, will be the key movers for sterling over the next couple of days.
EUR
The euro has largely traded sideways this week as markets step back and express some caution about the trade story. The EU is expecting its tariff letter in the next day or two, and depending on how bad the threats are, the euro could take some damage on the crosses. Typically, a more aggressive trade stance from Trump has been bad for the dollar and good for EURUSD, though relationships in FX have been anything but consistent in recent weeks. The domestic focus today will be on speeches from the ECB’s Lane, Guindos, and Nagel.
Markets
US equities cooled slightly but hovered close to record highs yesterday, with the noise around tariffs only instigating a pause rather than an outright selloff. In the commodities world, copper has soared to record highs as markets anticipate 50% US tariffs on the metal.
Main Economic Events (All Times CET)
3:30am: China CPI
4:00am: Reserve Bank of New Zealand Rate Decision
8:00pm: Federal Reserve Meeting Minutes
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