The U.S. has escalated its trade policy once again, with President Trump imposing a steep 50% tariff on copper and hinting at an even sharper 200% levy on pharmaceuticals. The copper market responded with a dramatic surge of over 13%, though gains slightly moderated the next day. Markets are bracing for more sector-specific investigations to conclude soon, while the approach to "transshipments" remains unclear, especially regarding how much domestic input qualifies. Beyond copper, financial markets appear mostly unaffected, with moderate movements in major currencies. The greenback is trading in a tight range.

Asia Pacific Markets

The Japanese yen faced downward pressure despite a recent surge in long-term domestic yields. The dollar hit JPY147.20 — its highest level since late June — before easing to JPY146.55. Surprisingly, rising Japanese bond yields failed to bolster the yen, likely due to persistent real wage declines and elevated inflation.
In Australia, the Reserve Bank held interest rates steady in a move that briefly boosted the Australian dollar to nearly $0.6560. However, this momentum quickly faded as European trading hours progressed.
In New Zealand, the central bank's rate hold aligned with expectations, though odds for an August cut have grown. The Kiwi initially dipped but regained ground above $0.6000 during the European session.

European Markets

The euro slid to a seven-day low, slightly under $1.1685, reflecting ongoing tension in EU-China relations. Reports indicate Beijing may cancel part of the upcoming summit with the EU amid growing trade friction and geopolitical strains, including incidents in the Red Sea. The euro has struggled to break above $1.1730, with further technical support seen near $1.1640.
Meanwhile, the British pound briefly dipped below the 61.8% retracement level from its recent rally but quickly rebounded to around $1.3600. UK bond yields continue to climb, now nearing levels not seen since the crisis in late 2022, as concerns grow over the country's widening fiscal deficit.

American Markets

The U.S. dollar initially lost ground following new tariff announcements but later found support in European and early North American trading. The Dollar Index climbed near 97.85, touching its 20-day moving average and approaching a key retracement level. It now fluctuates between 97.50 and 97.70, with potential downside if it slips below 97.40. Market participants are awaiting wholesale trade data, inventory figures, and the latest FOMC meeting minutes. Inventories, often volatile GDP components, saw a sharp increase in Q1, possibly due to tariff anticipation. Meanwhile, the market has come back in line with Fed projections, with two rate cuts fully priced in by year-end.