FOREX NEWS & BLOG

Markets kicked off the second half of the year with a fresh batch of economic data, political headlines, and policy clues that kept traders on their toes.

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Goldman Sachs:

• “We do not expect a large market reaction if OPEC8+ decides to increase production on Sunday as consensus has already shifted towards this outcome”

It is the consensus, yes, I published this earlier:

• Heads up for the OPEC+ meeting this coming weekend – expected to boost output again

Brent crude oil update since the spike higher on the Sunday evening US time/Monday morning Asia time after Trump bombed Iranian nuclear facilities:

This article was written by Eamonn Sheridan at www.forexlive.com.

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Canada’s ambassador in Washington and chief negotiator in the talks with the US:

• says Canada still aiming to get all of Trump’s tariffs lifted as part of a deal with the White House later this month
• remained confident the country can get the levies cancelled as part of negotiations for a new economic and security partnership
• Prime Minister Mark Carney has a self-imposed July 21 deadline

Info via Canadian media, Globe and Mail, link here (may be gated).

Chief negotiator Kirsten Hillman

This article was written by Eamonn Sheridan at www.forexlive.com.

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• “Canada still aims to lift all Trump tariffs as part of deal with US”
• Goldman Sachs do not expect a large market reaction if OPEC8+ decides to increase output
• Goldman Sachs: June US jobs report could trigger further USD losses vs EUR and JPY
• European Central Bank President Lagarde will speak on Wednesday
• Goldman Sachs says S&P 500 rally has room to run — but not for long
• Australian data – Retail Sales May 2025: +0.2% m/m (expected +0.4%)
• Australian May 2025 building permits +3.2% m/m (expected +4.8%)
• PBOC sets USD/ CNY mid-point today at 7.1546 (vs. estimate at 7.1623)
• USD under pressure with foreign investors’ diminishing demand for US-denominated assets
• Heads up for the OPEC+ meeting this coming weekend – expected to boost output again
• Bessent says he is certain the Federal Reserve will cut rates by September
• UK wage growth picks up, raising pressure on Bank of England over inflation outlook
• Trump says that Israel has agreed to a 60-day Gaza ceasefire proposal
• Iran prepared to mine Strait of Hormuz after Israeli strikes, but held back — US officials
• BoA Federal Reserve outlook: “The lack of progress on inflation raises the bar for cuts”
• Powell might have cut but for tariffs. Lagarde said CPI target hit, Ueda says his not yet.
• One for the TSLA traders, ICYMI: Trump said he would look at having Elon Musk deported
• Forexlive Americas FX news wrap 1 Jul: JOLTs job openings rise.Powell say economy is solid
• Oil: private survey of inventory shows a headline crude oil build vs draw expected
• Flow of funds moves into Dow and small cap stocks. Nasdaq lags
• Trade ideas thread – Wednesday, 2 July, insightful charts, technical analysis, ideas

It was a mostly subdued session across Asian financial markets today.

The key data point was Australian retail sales for May, which rose just 0.2% m/m (vs. expected +0.4%) and 3.3% y/y. The modest gain highlights continued pressure on household spending amid cost-of-living strains and weak consumer confidence. The soft print added to expectations for a Reserve Bank of Australia rate cut at its July 7–8 meeting. AUD/USD edged lower in response, though the move was part of a broader lift in the USD.

Elsewhere, oil, regional equities, gold, and bond markets all traded within tight ranges. Tokyo stocks fell in morning trade with ongoing concerns about Japan-US tariff talks.

In geopolitics:

• The Pentagon has paused some air defense missile and precision weapon shipments to Ukraine amid concerns about depleted U.S. stockpiles, according to Reuters citing sources.

• Trump said Israel has agreed to a 60-day Gaza ceasefire proposal, posting on social media that the next move is up to Hamas.

This article was written by Eamonn Sheridan at www.forexlive.com.

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The S&P 500 is likely to extend its rally through the next couple of weeks, boosted by improving liquidity, falling volatility, reduced recession fears, and strong seasonal trends, according to flow strategists at Goldman Sachs.

Info via Bloomberg:

“We think this rally will continue for the next couple weeks but lose steam into August”

“We are entering the strongest month for the S&P historically” (July, with the first half of the month better than the back half)

Tailwinds cited:

• seasonality
• lower volatility supporting sentiment
• systematic investors still have significant capital to allocate
• improved liquidity
• sentiment improved with geopolitical tensions easing and optimism growing around trade negotiations and possible rate cuts

GS on risks:

• rally has been narrow
• lower-quality stocks leading
• bullish positioning rising sharply

This article was written by Eamonn Sheridan at www.forexlive.com.

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Australian data – Retail Sales May 2025: +0.2% m/m, short of expectations again and recording a fourth month of sluggish spending:

• expected +0.4%, prior -0.1%
• +3.3% y/y (+3.8% prior), the slowest annual pace since November last year

Australian retail sales rose less than expected in May:

• drop in the food sector (this is a rarity)
• gains in clothing and department stores

–

There is nothing in the data to stand in the way of an Reserve Bank of Australia rate cut next week. The Bank meet July 7 and 8, a 25bp rate cut is widely although not unanimously expected.

This article was written by Eamonn Sheridan at www.forexlive.com.

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