OIL: Chevron Restarts Venezuelan Crude Cargo Loadings

• EUR has shrugged off Trump's tariff pledge, signalling that a 30% levy was either the core expectation, or that markets see a decent chance of a short-term reprieve ahead of the August 1st White House deadline. EUR is mid-table, with EUR/JPY retaining the underlying bullish bias that's kept the RSI in overbought territory for much off the rally across July.
• This shifts near-term focus to any reciprocal pushback from Brussels, as well as the circulating reports that the EU are looking to work more closely with other tariff target nations, to help alleviate the impact on trade flows.
• Equity futures are edging higher through the European open, helping support AUD/NZD and putting the cross above the 200-dma for the first time since late March. This extends the winning streak in the cross to six consecutive sessions, shifting the upside target to 1.0975 - the 61.8% retracement of the downleg posted off the February high.
• Looking beyond today, tomorrow's CPI print will look to resolve the latent Fed pricing for the July meeting (currently a negligible 1.6bps of cuts priced), but we also see risks around the beginning of quarterly earnings season.
• Reporting kicks off in earnest tomorrow, with financials the usual early focus. 9.4% of the S&P 500 are set to report this week. Tariffs remain a key buzzword in corporate reports. Heavy industry including General Electric, Snap-On and 3M which be watched for possible impacts, Markets will be particularly focused on any signs of frontloading of corporate purchases, the rate at which firms will passthrough costs to the consumer, and the expected impacts of tariffs on the bottom-line for consumer staples.

ERU5 98.12/98.25/98.37 call fly paper paid 3.5 on 3.5K.

On Friday, Fitch affirmed Germany’s sovereign rating at AAA, Outlook Stable.  Fitch believes that “Germany has the fiscal headroom to accommodate the planned hike in spending, with debt still well below the 80% peak reached in 2010. The country has a long record of fiscal prudence, and we expect a broad commitment to public finance sustainability to remain an important anchor for its 'AAA' rating”.

• “There is strong demand for its debt and financing costs…continue to be favourable compared with other large economies…Nevertheless, the shift in fiscal focus increases longer-term fiscal risks, in particular if the spending increase is not eventually offset by consolidation measures or a lasting improvement in growth prospects”.
• Fitch also caveat that despite fiscal/debt financing strengths, “Germany faces several structural challenges, including a rapidly ageing population, which weigh on its growth prospects and put pressure on public finances”.
• “We forecast the general government deficit will be 3% of GDP in 2025 from 2.8% in 2024, as one-off measures boost revenue and offset our expectation of only a modest ramp up in investment spending”.
• “We forecast the deficit will rise more quickly to an average of 3.9% of GDP in 2026-2027 (a level last reached in the early 2000s, excluding 2020), with defence spending increasing by close to 0.3pp per year. This is consistent with reaching Germany's newly announced 3.5% NATO defence spending target by 2029”.