MNI US OPEN - BOJ on Hold, Cites Continued High Uncertainty
EXECUTIVE SUMMARY
- BOJ KEEPS RATE AT 0.50%; UPS FY25 CPI FORECAST
- US SETS KOREA TARIFF RATE AT 15% IN DEAL WITH KEY SUPPLIER
- INDIA WEIGHS OPTIONS TO PLACATE TRUMP AFTER SHOCK 25% TARIFF
- TRUMP TARIFF SURPRISE TRIGGERS IMPLOSION OF MASSIVE COPPER TRADE
Fiugre 1: COMEX copper futures plunge over 20%
Source: MNI/Bloomberg Finance L.P.
NEWS
MNI FED REVIEW - JULY 2025: No Nod to September Cut
The July FOMC decision came with a subtle signal that the Committee was beginning to lay the groundwork for a September rate cut. But Chair Powell's press conference was largely spent playing down that prospect. The net impact on markets was a paring of rate cut expectations, with a September easing finishing the session at no better than a 50% proposition, versus about 60% pre-decision.
BOJ (MNI): BOJ Keeps Rate at 0.50%; Sticks to Gradual Hike
The Bank of Japan, as widely expected, left its policy interest rate unchanged at 0.50% on Thursday, citing continued high uncertainty surrounding the economic and inflation outlook. “Given that real interest rates are at significant low levels, if the outlook for economic activity and prices will be realized, the bank, in accordance with improvement in economic activity and prices, will continue to raise the policy interest rates and adjust the degree of monetary accommodation,” the BOJ said.
The BOJ raised its median forecast for core consumer prices in fiscal 2025 to 2.7% from 2.2% in April, citing stronger-than-expected price moves driven by surging rice costs and their spillover to food prices. Governor Kazuo Ueda said that the upward revision to the Bank’s inflation outlook for this fiscal year does not signal a shift in the direction of monetary policy. “We revised up the inflation view (to 2.7% from 2.2% made in April) due mainly to the high food prices. But our policy will not be influenced by it alone,” Ueda told reporters.
US/S.KOREA (BBG): US Sets Korea Tariff Rate at 15% in Deal With Key Supplier
The US reached a trade agreement with South Korea that will impose a 15% tariff on imports, including autos, and sets up major investment in American energy and shipbuilding. The agreement, announced by President Donald Trump and confirmed by officials in Seoul, brings one of the world’s biggest exporters into the US’s emerging trade framework and spares a major supplier of cars, smartphones and machinery from a 25% rate just a day before the deadline.
US/EU (MNI): EU Off-Wine & Spirits Face 15% Tariff Until Sector-Specific Deal Reached
Reuters reports comments from an EU official stating that US tariffs on EU wine and spirits will be set at 15% from 1 August until a sector-specific deal is reached between the two sides. For a number of EU countries, reaching an agreement on wine and spirits has been a key aspect of trade talks with the US. Back in March, US President Donald Trump threatened a 200% tariff on alcohol exports from the EU in response to EU plans for a 50% tariff on US whiskey. This, in turn, was a retaliation to Trump's steel and aluminium tariffs.
US/MEXICO (BBG): Trump, Mexico’s Sheinbaum Plan Call as Tariff Deadline Nears
President Donald Trump and his Mexican counterpart Claudia Sheinbaum plan to speak by phone on Thursday morning, according to people familiar with the plans, as a Friday deadline to avoid a 30% tariff nears with no agreement between the US and its largest trade partner. Talks between the governments, which saw Mexican Economy Minister Marcelo Ebrard and his negotiating team visit Washington multiple times to meet with Trump’s cabinet members, have reached the point where decisions must be taken at the leaders’ level, according to the people, who asked not to be identified without permission to speak publicly.
US/CANADA (NYT): Trump Threatens Canada Ahead of Trade Deadline for Backing Palestinian State
President Trump said early Thursday that it would be “very hard” to make a trade deal with Canada after its prime minister said he planned to recognize Palestine as a state. It was Mr. Trump’s latest threat against an ally on the eve of a deadline to impose tariffs. Prime Minister Mark Carney of Canada had said on Wednesday that Canada would recognize Palestine as a state if the Palestinian Authority committed to certain conditions, including holding elections.
US/INDIA (BBG): India Weighs Options to Placate Trump After Shock 25% Tariff
India is weighing options to placate the White House, including boosting US imports, and has ruled out immediate retaliation to President Donald Trump’s surprise 25% tariff threat, according to people familiar with the matter. Officials in New Delhi were shocked and disappointed by Trump’s announcement on Wednesday, the people said, asking not to be identified as the discussions are private. The government is keen to keep bilateral trade talks on track and is exploring ways to increase purchases from its largest trading partner, they said.
US/CHINA (BBG): China Summons Nvidia Over H20 Chip Security Days After US Talks
Chinese authorities summoned Nvidia Corp. to discuss alleged security risks related to its H20 chips, casting doubt over the domestic business of the world’s most valuable company weeks after co-founder Jensen Huang met senior officials in Beijing. The Cyberspace Administration of China called company representatives into a meeting to discuss what it deemed serious security vulnerabilities with the artificial intelligence chip. In a statement, the internet watchdog cited comments by US lawmakers about the need to install tracking capabilities into advanced chips sold to other countries.
US/THAILAND (BBG): US Made Trade Deals With Thailand and Cambodia, Lutnick Says
The US has reached trade agreements with Cambodia and Thailand, Commerce Secretary Howard Lutnick said, days after the Southeast Asian neighbors agreed to a ceasefire at President Donald Trump’s urging to end deadly clashes along their disputed border. “And you know what we did today? We made trade deals with Cambodia and Thailand,” Lutnick said Wednesday night in an interview with Sean Hannity on Fox News. He didn’t elaborate before the interview ended.
US (BBG): Trump Tariff Surprise Triggers Implosion of Massive Copper Trade
The global copper market is reeling from its biggest shock yet in a year of policy surprises, violent price swings and unprecedented trade dislocation. President Donald Trump went ahead with 50% tariffs on copper imports, but exempted refined metals that are the mainstay of international trading. The move triggered a record plunge for US prices, after an unprecedented period of fat profits for traders who hurried metal to America before the levies kicked in. A large premium for New York futures over London evaporated.
US (POLITICO): Squeezed ‘Like a Lemon’: White House Raising the Pressure Ahead of Friday Tariff Deadline
President Donald Trump has settled on tariff rates for most of the country’s largest trading partners. The rest of the world stands in limbo. A White House official confirmed that Trump plans to sign new executive orders on Thursday imposing higher tariff rates on several countries that have been unable to reach negotiated trade agreements by his self-imposed Friday deadline.
RUSSIA/UKRAINE (BBG): Russia Hits Kyiv With Deadly Barrage Defying Trump Deadline
Russia attacked Kyiv with a barrage of drones and missiles overnight in defiance of US President Donald Trump’s calls for the Kremlin to reach a truce with Ukraine. The bombardment lasted for several hours, killing at least six people including a child and injuring more than 50, Kyiv city military administration chief Tymur Tkachenko said on Telegram. The death toll is likely to rise, according to the authorities.
RBA (MNI): RBA's Hauser Says Market Overestimated July Cut
The market had overestimated the chance of a cut at the July meeting due to significant global uncertainty and its impact on the Reserve Bank of Australia Board’s outlook, Deputy Governor Andrew Hauser told an industry forum on Thursday. “To some extent, what we're going to tell you is, ‘look, we're uncertain,’” Hauser said, referencing the board’s surprise decision to hold the cash rate at 3.85%.
BRAZIL (MNI): BCB's Copom Keeps Rates at 15%, Holding Ahead
The Central Bank of Brazil (BCB) unanimously decided to hold its official Selic rate at 15.00% Wednesday, saying that the "interruption of the rate hiking cycle" will continue in further meetings to "examine its yet-to-be-seen cumulative impacts." The decision came amid increasing uncertainty around U.S. trade policy with the imposition of a 50% tariff — with some exceptions — starting August 6.
CORPORATE (FT): Microsoft Profits Soar Almost 25% on Boom in Cloud Computing Revenues
Microsoft said its quarterly profits soared as revenues from its cloud computing division surged to a record level, driven by rampant demand for artificial intelligence services. Net income increased 24 per cent year on year to $27.2bn, surpassing analysts' expectations for $25.3bn in the three months to the end of June, according to a filing on Wednesday. Revenue rose 18 per cent to $76.4bn in the quarter, exceeding the average $73.9bn estimate, compiled by Visible Alpha.
CORPORATE (FT): Meta Shares Jump on Strong Results as Zuckerberg Sets Out ‘Superintelligence’ Goals
Meta’s shares jumped more than 11 per cent off the back of better than expected earnings and forecasts, adding more than $150bn to its market value in a sign of Wall Street confidence as Mark Zuckerberg doubles down on his big bet on artificial intelligence. In recent months, the chief executive has embarked on an aggressive hiring spree, offering sign-on bonuses worth hundreds of millions of dollars to tempt AI talent from rivals such as OpenAI, Apple and Google to a new secretive “superintelligence” lab inside the company.
DATA
GERMANY DATA (MNI): MNI Projects 2.0% Y/Y German National CPI, Core 2.6-2.7%
- BAVARIA JUL CPI +0.3% M/M, +1.9% Y/Y
- NRW JUL CPI +0.2% M/M, +1.8% Y/Y
- BADEN WUERT JUL CPI +0.4% M/M, +2.3% Y/Y
From state-level data that equates to 89.1% weighting of the national July flash German CPI print (due at 13:00 GMT / 14:00 CET), MNI estimates that national CPI (non-HICP print) rose by around 2.0% Y/Y (2.0% prior) and rose around 0.3% M/M. See the tables below for full calculations. Analyst consensus stands at 2.0% Y/Y (1.95%Y/Y Bloomberg median to 2dp) and 0.2% M/M, but is skewed to the upside for the M/M print - so there might be some marginal upside risks to consensus. Current tracking of Core CPI (ex-energy and food, based on 50% of the national index) implies around 2.6-2.7% Y/Y (2.7% prior).
GERMANY JULY UE RATE (SA) 6.3% (FCST 6.3%); JUNE 6.3% (MNI)
EUROZONE JUN UNEMPLOYMENT RATE 6.2% (MNI)
FRANCE DATA (MNI): Flash July HICP Slightly Above Consensus
- FRANCE JUL CPI +0.2% M/M, +1% Y/Y
- FRANCE JUL HICP +0.3% M/M, +0.9% Y/Y
- FRANCE JUN PPI -0.2% M/M, +0.2% Y/Y
French flash HICP inflation was higher-than-expected in July at 0.94% Y/Y unrounded (vs 0.8% rounded consensus, 0.86% prior). This follows a stronger-than-expected reading in Spain yesterday. CPI inflation meanwhile was in line with expectations at 1.00% Y/Y (vs 0.97% prior). Looking at major sub-components on a CPI basis: Services inflation accelerated a touch to 2.48% Y/Y (vs 2.44% prior), now at the highest since August 2024. Non-energy industrial goods inflation trends remain muted at -0.23% Y/Y. It has tracked at a rounded -0.2% Y/Y for five consecutive months now. Food inflation rose to 1.61% Y/Y (vs 1.37% prior), the highest rate since March 2024.
ITALY DATA (MNI): Unemployment Rate Appears to Have Bottomed Out
The Italian unemployment rate was slightly lower than expected at 6.3% (vs 6.4% cons, 6.5% prior), with month-to-month swings once again dictated by labour force changes, rather than unemployment-employment flows. Zooming out, the persistent downward trend in the unemployment rate since 2021 appears to have bottomed out, stabilising around the 2007 lows. 3m/3m employment growth was 0.4% for the third consecutive month in June, and the EC's expected employment indicator continues to point to above-average hiring expectations.
ITALY JUL FLASH HICP +1.7% Y/Y (MNI)
SWITZERLAND DATA (MNI): June Retail Sales Outperform
- SWISS JUN RETAIL SALES +1.5% M/M, +3.8% Y/Y
Swiss (real) retail sales were strong in June, at +1.5% M/M, the highest sequential reading in the series since July 2024 (-0.4% prior). Broad-based strength in the data suggests the Swiss consumer remains overall resilient. Remember that yesterday's KOF also saw a rebound at 101.1, above consensus of 97.9 vs June's 96.3 despite a US-Swiss trade deal remaining in the pipeline for now. From a monetary policy perspective, today's print will be of limited significance as the SNB's main focus is on inflation amid the continued CPI Y/Y readings around 0% in the country.
CHINA DATA (MNI): China Jul Manufacturing PMI Falls Within Contraction
- CHINA JUL MANUFACTURING PMI 49.3 VS 49.7 IN JUN
MNI (Beijing) China's Manufacturing Purchasing Managers Index fell by 0.4 points to 49.3 in July, staying below the breakeven 50 mark for the fourth month, affected by traditional off-season, high temperatures, heavy rains and floods in some areas, data from the National Bureau of Statistics showed Thursday. The production and new order sub-indices were 50.5 and 49.4 respectively, down 0.5 and 0.8 points from the previous month, as market demand slowed down.
JAPAN DATA (MNI): Japan Factory Output Rises; 1st Time in 3 Months
- JAPAN JUNE FACTORY OUTPUT +1.7% M/M; MAY -0.1%
Japan's industrial output rose 1.7% m/m in June, marking the first increase in three months after a 0.1% decline in May, data released by the Ministry of Economy, Trade and Industry showed on Thursday, driven by stronger production of electronic parts and devices, as well as general-purpose and business-oriented machinery. Automobile production edged up 0.1% m/m in June, following a 2.5% rise in May. The modest gain suggests that front-loaded exports have peaked and carmakers are now feeling the impact of tariffs.
JAPAN JUNE RETAIL SALES +2.0% Y/Y; MAY +1.9% (MNI)
AUSTRALIA DATA (MNI): Aussie Retail Spending Rises in June
- AUSTRALIA JUN RETAIL SALES +1.2% M/M
Australian retail turnover rose 1.2% in June following May's 0.5% increase, higher than the 0.4% market expectation, according to data released by the Australian Bureau of Statistics on Tuesday. "The strong June month rise in retail turnover was driven by discounts linked to sales and new product releases," said Robert Ewing, head of business statistics at the ABS. "After steady growth throughout the year, mid-year sales events increased spending on discretionary items like furniture, electrical goods and clothing items."
AUSTRALIA DATA (MNI): Multi-Dwellings Drove Approval Growth in Q2
- AUSTRALIA MAY BUILDING APPROVALS +11.9% M/M, +27.4% Y/Y
The number of building approvals rose sharply in June driven by the volatile multi-dwelling component. They were up 11.9% m/m after a downwardly-revised +2.2% in May with private houses down 2.0% m/m but non-houses jumped 33.1% m/m. Both components are above Q4 2019 levels at 8.1% and 18.6% respectively but with housing shortages persisting, further rises in approvals are needed.
FOREX: Yen Under Renewed Pressure
- The Dollar has started the session in the red against most of the majors, and that's despite the hawkish leaning FOMC yesterday. Mr Powell rejected the argument from two dissenting members, and maintained the need for the Fed to stay vigilant against inflation risks.
- Some of the gains for currencies more sensitive to risk, such as the likes of SEK, AUD and NZD, have been attributed to the risk-on tone, as e-mini S&P futures printed a new record high overnight.
- The e-mini S&P initially plummeted on the Fed's hawkish stance, but quickly reversed all of its losses following a beat for Meta and Microsoft earnings last night.
- The SEK is the best performer, up half a percent, but the chart is getting interesting at present. The 9.8000 level has again provided some resistance for USDSEK (this level has now held since the 13th May), but for now, USDSEK has fallen down towards 9.7000, printed a 9.7291 earlier.
- The standout mover has been the Yen, BoJ Governor Ueda noted that the risk of the BoJ falling behind the curve on rate hikes is not that high at present, while he also notes that the JPY is not really deviating from the BoJ’s expectations. These comments have put pressure back against the Yen.
- Some market participants will look at the 150.00 level next, and as quick side note, a test to 150.03 would reverse the Tariffs announcement in April. The 150.49 level is the 2nd April high.
BONDS: Off Highs, Gilts Test Levels of Interest
Bonds are off early London highs despite a pullback in European equities.
- Little reaction in EGBs to German state-level CPI, even given modest upside risks posed to the national reading. French & Italian HICP readings were also a touch firmer than expected but had little tangible market impact.
- The German curve has twist flattened, with yields 1.5bp higher to 3bp lower.
- Bund yields continue to struggle to break above 2.70% on a sustained basis despite several moves above month-to-date. Similar story seen in 30s and moves above 3.20%.
- German 2s10s is less than 1bp above its July base, while German 5s30s has registered the lowest level seen in July, trading more than 15bp off the ’25 top.
- EGB spreads to Bunds little changed to 1bp tighter.
- EUR short end shows 50/50 odds of a 25bp cut before year-end.
- Gilts rallied at the open, with some focus on the sizeable month-end index projections.
- Futures traded as high as 92.27, piercing the July 22 high (92.15). Our technical analyst flags a 50% retracement (92.42) as the next level of upside interest. Contract has faded back to 92.10.
- Yields flat to 3bp lower, curve flatter.
- 10-Year yields tested the 15 July low (4.558%). Extension through there would target the July 4 low (4.506%). Also note the round numbers (4.55% & 4.50%) have the potential to act as intermediate yield support/resistance in futures (those yield levels are equivalent to 92.31 & 92.75 in futures today).
- German national CPI data, as well as U.S. PCE and weekly jobless claims, provide the focus from here.
EQUITIES: Fresh Cycle Highs for E-Mini S&P Affirms Bullish Conditions
The trend condition in Eurostoxx 50 futures remains bullish and short-term weakness appears corrective. Support at 5281.00, the Jul 1 / 4 low, remains intact. A clear break of this level would strengthen a bearish threat. For bulls, a stronger resumption of gains would refocus attention on the bull trigger at 5486.00, the May 20 high. It has recently been pierced, a clear breach of it would resume the bull cycle and open 5500.00. The trend set-up in S&P E-Minis remains bullish. A fresh cycle high today confirms a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. Note that moving average studies are in a bull-mode position highlighting a clear dominant uptrend. Sights are on 6477.31, a Fibonacci projection. Key support is at the 50-day EMA, at 6181.96. Support at the 20-day EMA is at 6329.36.
- Japan's NIKKEI closed higher by 415.12 pts or +1.02% at 41069.82 and the TOPIX ended 22.89 pts higher or +0.78% at 2943.07.
- Elsewhere, in China the SHANGHAI closed lower by 42.509 pts or -1.18% at 3573.208 and the HANG SENG ended 403.6 pts lower or -1.6% at 24773.33.
- Across Europe, Germany's DAX trades higher by 116.6 pts or +0.48% at 24378.82, FTSE 100 higher by 31.89 pts or +0.35% at 9168.97, CAC 40 up 7.23 pts or +0.09% at 7869.19 and Euro Stoxx 50 up 10.08 pts or +0.19% at 5403.26.
- Dow Jones mini up 203 pts or +0.45% at 44836, S&P 500 mini up 68.5 pts or +1.07% at 6464.75, NASDAQ mini up 333 pts or +1.42% at 23813.25.
Time: 10:00 BST
COMMODITIES: Gold Partially Pares Some of This Week's Earlier Decline
WTI futures have traded higher this week highlighting an extension of the current corrective cycle. $69.41, the 50.0% retracement of the Jun 23-24 downleg, has been pierced. A continuation higher would open $70.96 next, the 61.8% retracement point. On the downside, support to watch is the 50-day EMA, at $65.21. The average has been pierced, a clear break of it would expose $58.17, the May 30 low. Gold has pulled back from its Jul 23 high. Short-term weakness is considered corrective - for now - and a bull cycle that started Jun 30 remains intact. However, the yellow metal has traded through support at $3321.1, the 50-day EMA. A clear break of this level signals scope for a deeper retracement and exposes the next key support at $3248.7, the Jun 30 low. Key near-term resistance is $3439.0, the Jul 23 high. A break of this hurdle would be bullish.
- WTI Crude down $0.13 or -0.19% at $69.88
- Natural Gas down $0.04 or -1.18% at $3.01
- Gold spot up $34.9 or +1.07% at $3309.87
- Copper down $118.1 or -21.14% at $439.75
- Silver down $0.18 or -0.49% at $36.9395
- Platinum up $11.73 or +0.89% at $1324.83
Time: 10:00 BST
| Date | GMT/Local | Impact | Country | Event |
| 31/07/2025 | 1000/1200 | ** |  IT | PPI |
| 31/07/2025 | 1200/1400 | *** |  DE | HICP (p) |
| 31/07/2025 | 1230/0830 | *** |  US | Jobless Claims |
| 31/07/2025 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 31/07/2025 | 1230/0830 | * |  CA | Payroll employment |
| 31/07/2025 | 1230/0830 | *** | US | Personal Income and Consumption |
| 31/07/2025 | 1230/0830 | *** | US | Employment Cost Index |
| 31/07/2025 | 1230/0830 | *** | CA | Gross Domestic Product by Industry |
| 31/07/2025 | 1342/0942 | *** | US | MNI Chicago PMI |
| 31/07/2025 | 1430/1030 | ** | US | Natural Gas Stocks |
| 31/07/2025 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 31/07/2025 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 01/08/2025 | 2300/0900 | ** |  AU | S&P Global Manufacturing PMI (f) |
| 01/08/2025 | 2330/0830 | * |  JP | Labor Force Survey |
| 01/08/2025 | 0030/0930 | ** | JP | S&P Global Final Japan Manufacturing PMI |
| 01/08/2025 | 0130/1130 | * | AU | Producer price index q/q |
| 01/08/2025 | 0145/0945 | ** |  CN | S&P Global Final China Manufacturing PMI |
| 01/08/2025 | 0715/0915 | ** |  ES | S&P Global Manufacturing PMI (f) |
| 01/08/2025 | 0745/0945 | ** | IT | S&P Global Manufacturing PMI (f) |
| 01/08/2025 | 0750/0950 | ** |  FR | S&P Global Manufacturing PMI (f) |
| 01/08/2025 | 0755/0955 | ** | DE | S&P Global Manufacturing PMI (f) |
| 01/08/2025 | 0800/1000 | * | IT | Retail Sales |
| 01/08/2025 | 0800/1000 | ** |  EU | S&P Global Manufacturing PMI (f) |
| 01/08/2025 | 0830/0930 | ** |  GB | S&P Global Manufacturing PMI (Final) |
| 01/08/2025 | 0900/1100 | *** | EU | HICP (p) |
| 01/08/2025 | - | *** | US | Domestic-Made Vehicle Sales |
| 01/08/2025 | 1230/0830 | *** | US | Employment Report |
| 01/08/2025 | 1345/0945 | *** | US | S&P Global Manufacturing Index (final) |
| 01/08/2025 | 1400/1000 | *** | US | ISM Manufacturing Index |
| 01/08/2025 | 1400/1000 | * | US | Construction Spending |
| 01/08/2025 | 1400/1000 | *** | US | U. Mich. Survey of Consumers |
| 01/08/2025 | 1400/1000 | ** | US | University of Michigan Surveys of Consumers Inflation Expectation |
| 01/08/2025 | 1400/1000 | * | US | Construction Spending |
| 01/08/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 01/08/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
