Americas FX news summary: Canadian jobs rise, EU tariff letter still pending

Market Overview

Gold has risen by $33, now sitting at $3,355. The yield on US 10-year treasuries is expected to increase by 7.1 basis points, reaching 4.42%. Meanwhile, WTI crude oil has jumped from $2.14, trading at $68.71. However, the S&P 500 is down 0.3%, with the USD leading while the JPY has struggled.

As we begin the day, many are waiting for Trump’s letter to the EU regarding higher tariffs, but it hasn’t arrived yet. There are mixed reports suggesting no meetings are planned for the weekend. Conversations highlight concerns about agricultural and automotive sectors, emphasizing that every decision seems to rest on the president’s unpredictable choices.

The market appears to have its own theories, especially with CAD trading over the past day. The Canadian dollar dipped following Trump’s unexpected 35% tariffs, but the drop was relatively modest and somewhat overshadowed by the significant spikes we saw. Similarly, the Brazilian real’s decline post Trump’s 50% tariff announcement was mild. Essentially, the market seems to think that tariffs won’t come into play by the August 1 deadline.

This uncertainty contributed to the Euro dropping about 40 pips against the USD/CAD today. Interestingly, Canada’s employment report for June showed robust job growth, which caught many off guard with an unexpected drop in unemployment rates.

Another significant development today involved USD/JPY, impacted by Treasury yields, fears related to tariffs on Japan’s export-heavy sectors, and the positive momentum from Japan’s future House elections. This pair has seen steady bids during Asian trading, likely closing near their weekly highs.

The British pound also struggled today, dipping by 90 pips. Its performance weakened along with the Euro amid ongoing tariff discussions. The pound stopped just below 1.3520, marking a drop of another 35 pips to its lowest since June 22.

On another note, the US dollar situation is intriguing, particularly with hopes of a potential Fed rate cut. This, combined with soaring prices, the threat of tariffs, immigration enforcement, and stock market trends, is raising inflation concerns. Next week’s CPI report could create some unease.