CZK: EUR/CZK Hovers Above Recent Lows, July Retail Sales Miss Forecasts

• EUR/USD: Aug07 $1.1500(E1.1bln), $1.1600(E957mln); Aug08 $1.1500(E1.5bln); Aug11 $1.1550(E1.2bln)
• USD/JPY: Aug07 Y147.65($1.1bln), Y148.00-15($1.8bln), Y148.50($1.2bln)
• EUR/GBP: Aug08 Gbp0.8675(E1.3bln), Gbp0.8700(E1.2bln)
• AUD/USD: Aug07 $0.6500(A$1.1bln), $0.6600(A$2.0bln); Aug08 $0.6500(A$4.3bln)
• NZD/USD: Aug11 $0.5920-30(N$1.1bln)

Should Trump pursue secondary tariffs, they would likely fall primarily on India, with Trump saying yesterday he’d “very substantially” raise tariffs on Indian exports to the US over the next 24 hours to punish New Delhi for buying Russian oil.

• An air truce may be in the best interest of both parties. In July, Russia fired 6,443 drones and missiles into Ukraine, a new monthly record. However, Ukraine has also had success with a long-range strike strategy. President Volodymyr Zelenskyy touted on X this morning “the effectiveness of our long-range strikes on Russian military machine and war economy.”
• The Twelve-Day War between Iran and Israel revealed critical shortages in missile interceptor stocks that are likely mirrored in both the Russian and Ukrainian armouries. An air truce could offer a short-term reprieve for both Moscow and Kyiv to replenish stocks, while also providing space for additional technical meetings to lay the groundwork for a first wartime leader-level meeting, a request made by Zelenskyy on Aug 1.
• The Kremlin said yesterday that a Putin-Zelenskyy meeting could take place “after the necessary work is done at the expert level and the necessary distance has been covered.” A Kremlin spokesperson noted that this work “has not yet been done.”
• Trump has teed up a special “announcement” at the White House at 16:30 ET 21:30 BST. The announcement could relate to his decision on Russia sanctions or unrelated decisions on Fed/BLS nominees or the DOJ’s ‘Russiagate’ investigation. 

A meeting between US President Donald Trump’s Middle East envoy, Steve Witkoff, and Russian President Vladimir Putin is underway in Russia, per Interfax. The meeting comes ahead of Trump’s Friday deadline for Russia to reach a ceasefire with Ukraine or face new penalties. Measures could include fresh sanctions on Russia's economy and secondary tariffs on countries that buy Russian oil and gas. 

• Speaking at the White House yesterday, Trump appeared to downplay the scope of potential secondary tariffs: "I never said a percentage, but we'll be doing quite a bit of that. We'll see what happens over the next fairly short period of time... We have a meeting with Russia tomorrow… We’ll make that determination at that time..." 
• Trump said on July 15: "We're going to be doing secondary tariffs if we don't have a deal... It's very simple. And they'll be at 100%." The 100% number was itself a step down from a punitive 500% secondary tariff proposed by bipartisan legislation in the Senate. The Senate since parked the bill, giving Trump unilateral control over any sanctions.
• Ahead of today’s meeting, Bloomberg reported that the Kremlin is weighing up proposing an “air truce” as a concession to head off sanctions. While an air truce is unlikely to lead to a durable ceasefire, it could provide an off-ramp for Trump to claim a win without backing down from his threat (inviting more TACO accusations) or pursuing secondary tariffs that could derail delicate trade talks with China.