Recent U.S. tariff measures remain a central focus for global markets. One of the more controversial announcements was the 50% tariff imposed on Brazilian goods, especially given the U.S. currently enjoys a trade surplus with Brazil. The action appears driven by political motivations, particularly dissatisfaction with how Brazil has treated former President Bolsonaro. Following the U.S. dollar’s recent rally—spurred by critical remarks made about Fed Chair Powell—the currency has begun to ease against most global counterparts. Among G10 currencies, only the Swiss franc is showing notable weakness.

Asia Pacific Markets

In the Asia Pacific region, the Japanese yen weakened as the dollar climbed from JPY142.70 on July 1 to almost JPY147.20. This followed a rebound in U.S. Treasury yields and solid demand for long-term government bonds. Japan’s producer prices declined for the second straight month, pointing to subdued inflation pressures.
Meanwhile, the Australian dollar gained ground after a brief pause, buoyed by rising copper prices. The metal's surge followed the announcement of steep U.S. tariffs set to take effect in August. The Aussie bounced from near $0.6510 to $0.6565, in line with weekly highs.

European Markets

The euro has been retreating from recent highs after briefly touching $1.1765. It has struggled to maintain gains and now trades between $1.1710 and $1.1750. Technical indicators point to weakening momentum, and options expiring at $1.18 may cap upside movement. The yield gap between U.S. and German two-year bonds remains elevated, hovering around 200 basis points.
In the UK, the pound remained range-bound around $1.36, failing to break key resistance levels for several days—until today. Analysts are eyeing upcoming UK GDP data, with modest growth expected after a contraction in April. Markets are already pricing in a high likelihood of a Bank of England rate cut in August.

American Markets

The U.S. dollar index is stabilizing after nearing key technical levels. Following a slight decline below 97.30, it rebounded to approach 97.50. It remains stuck between its 5-day and 20-day moving averages. Weekly jobless claims, due today, might appear unusually low due to the July 4 holiday. Still, the broader trend shows a slowing labor market, with continued claims rising and average Q2 claims surpassing those of Q1. A decline in total hours worked in June also hints at potential layoffs. Overall, the data reinforces the outlook for moderate economic cooling and supports expectations of about 50 basis points in Fed rate cuts by year-end.