A major shift occurred following a U.S. Court of International Trade decision against the Trump-era "Liberation Day" tariffs. The court declared that the 1977 law used to justify these measures was misapplied, impacting other tariffs related to border security and fentanyl control as well. Initially, the dollar surged but later stabilized, with gains in currencies like the South African rand, Mexican peso, and Chinese yuan. Equity markets reacted positively overall, though Taiwan and India lagged. U.S. futures climbed, while bonds faced moderate pressure. Commodities showed mixed moves—gold rebounded slightly after a dip, and July WTI oil remained above last week’s settlement despite a modest pullback.

Asia Pacific Markets

In Japan, the yen faced renewed weakness, with the dollar climbing above JPY146 before easing back. Japanese investors continued their steady foreign bond buying, averaging JPY215 billion weekly, similar to last year. Foreign demand for Japanese bonds also increased, with stock activity remaining modest. Notably, domestic institutions conducting transactions in offshore hubs like the Cayman Islands might be skewing foreign flow statistics.
Meanwhile, Australia’s dollar extended its three-day decline to a new low, just above $0.6405, before bouncing back. Weak private capital expenditure data weighed on sentiment, though upcoming retail and credit data could offer a clearer picture of economic resilience.

European Markets

The euro weakened to a nine-day low of $1.1210 after a recent peak near $1.1420, reflecting its soft performance this week. However, it regained ground to trade around $1.1280 in European dealings. A close above $1.1300 would suggest a more positive technical outlook. The broader news from the eurozone remained limited, though trade talks with the U.S. have intensified, with daily communication planned between top negotiators.
The British pound also faced declines, slipping to $1.3415 after reaching a three-year high near $1.3600 earlier in the week. A rebound to $1.3470 in early trading hints at a possible turnaround if upward momentum continues.

American Markets

The Dollar Index jumped after the trade court ruling, opening near 100.50 before gradually pulling back. Despite some weakness in recent indicators—such as lower fuel demand and weak payroll tax collections—the greenback maintained relative strength. GDP forecasts for Q2 are mixed: the Atlanta Fed expects 2.2% growth, while private economists see a slower 1.3% pace. Labor market conditions are softening, with the four-week jobless claim average possibly declining after a five-week climb. May’s employment report is anticipated to show reduced job gains, estimated at 130,000. Meanwhile, container traffic from China dropped again after a brief recovery, pointing to ongoing trade uncertainties.