MNI US OPEN - EU Preps Potential Tariffs on US Services
EXECUTIVE SUMMARY:
- EU PREPARES LIST OF POTENTIAL TARIFFS ON US SERVICES - FT
- SOUTH KOREA, VIETNAM AND THAILAND ALL STILL WORKING TOWARD US TRADE DEALS
- NEW ASSESSMENT SHOWS US STRIKES DESTROYED ONLY ONE OF THREE IRANIAN NUCLEAR SITES
- US RETAIL SALES, WEEKLY JOBLESS CLAIMS DUE, FED'S WALLER SET TO SPEAK AFTER-MARKET
Figure 1: US-EU trade in focus as EU reportedly prepare a list of potential tariffs on US services
NEWS
US-EU (FT): EU prepares list of potential tariffs on US services
The EU is preparing a list of potential tariffs on US services, as well as export controls, as part of its possible retaliation if trade talks with Washington fail, two officials briefed on the talks said. The European Commission, which is assembling the list of measures as part of its response to US President Donald Trump’s tariffs, still has to present the list to EU countries.
US-SOUTH KOREA (BBG): South Korean Minister Nominee Says US Deal Possible in Two Weeks
South Korea’s foreign minister nominee said he believes it may be possible to reach a trade deal with the US before the 25% across-the-board tariffs proposed by President Donald Trump take effect in August. “It seems possible,” Cho Hyun, President Lee Jae Myung’s pick to be his top diplomat, said during his confirmation hearing in parliament Thursday. “It is difficult to predict, but we are making every effort on our end, and from the US perspective, too, we are not only a very important ally but also a key trade partner, so I think they will prioritize negotiating with us.”
US-VIETNAM (BBG): Vietnam Says Negotiators Still Working With US on Trade Deal
Vietnam’s negotiators are still working on the terms of the tariff deal following the call between Party chief To Lam and US President Donald Trump more than two weeks ago, Ministry of Foreign Affairs spokesperson Pham Thu Hang said at a briefing in Hanoi Thursday.
US-THAILAND (BBG): Thailand, US to Hold Trade Talks Thursday: Finance Official
Officials from Thailand and the US will hold a virtual meeting late Thursday as the Southeast Asian nation seeks to avoid a 36% tariff threatened by President Donald Trump, Deputy Finance Minister Paopoom Rojanasakul says from Bangkok.
US-UK (BBG): UK Pushes US to Drop Key Sticking Point to Steel Trade Deal
UK officials are optimistic that the Trump administration will soon agree to modify the domestic-production requirements that are holding up a trade agreement to lower US tariffs on British steel. The UK has asked that steel imported from European countries such as the Netherlands — and then manufactured into products in the UK — qualify as British for the purposes of US tariffs, according to people with knowledge of the negotiations.
US-IRAN (NBC): New U.S. assessment finds American strikes destroyed only one of three Iranian nuclear sites
One of the three nuclear enrichment sites in Iran struck by the United States last month was mostly destroyed, setting work there back significantly. But the two others were not as badly damaged and may have been degraded only to a point where nuclear enrichment could resume in the next several months if Iran wants it to, according to a recent U.S. assessment of the destruction caused by the military operation, five current and former U.S. officials familiar with the assessment told NBC News.
US (MNI): Senate Passes Trump's Rescissions Package, Raises Risk Of Govt Shutdown
The Senate has voted 51-48 to pass President Donald Trump's USD$9 billion request to cut Congressionally authorised funding for the State Department's foreign aid budget and public broadcasters. Two Republican Senators, Susan Collins (R-ME) and Lisa Murkowski (R-AK), voted against the measure.
Demand for bank financing from Japanese corporations declined compared to three months ago, as customers increased internally generated funds and found easier access to alternative sources, according to the Bank of Japan’s Senior Loan Officer Opinion Survey on Bank Lending Practices, released Thursday.
DATA
UK MAY AVE WEEKLY EARNINGS EX-BONUS +5% YY
MNI: UK JUN CLAIMANT CHG +25900
UK JUN CLAIMANT RATE +4.5%
- There was a huge upward revision of May payrolls from -109k to -25k (the MNI median expected the revision to -55k there) and June was broadly in line at -41k (MNI median -35k).
- Private regular AWE was 4.88%Y/Y in the 3-months to May (MNI median was 4.8%Y/Y).
- The LFS was a bit mixed: employment 3-month change at 134k (MNI median 45k) but the unemployment rate was 4.67% (MNI median was 4.6% with upside risks).
- GBPUSD little changed vs pre-data after falling 10 pips originally (probably on the unemployment rate).
MNI: EUROZONE JUN FINAL HICP +0.3% M/M, +2% Y/Y
EUROZONE JUN FINAL CORE HICP +0.4% M/M, +2.3% Y/Y
EUROZONE JUN FINAL SERVICES HICP +0.7% M/M, +3.3% Y/Y
MNI: AUSTRALIA JUN EMPLOYED PERSONS CHANGE 2K
**MNI:AUSTRALIA JUN UNEMPLOYMENT RATE +4.3%
MNI: AUSTRALIA JUN F-T EMPLOYED PERSONS CHANGE -38.2K
MNI:AUSTRALIA JUN LABOR PARTICIPATION RATE +67.1%
Japan’s exports declined for the second consecutive month in June, falling 0.5% year-on-year following a 1.7% drop in May, as shipments of automobiles and iron and steel products weakened under the impact of U.S. tariffs, according to data released Thursday by the Ministry of Finance.
GILTS: Off Lows, Supply Passes Smoothly, Bears Fail To Force Clean Support Break
Gilt futures off lows, with smooth digestion of supply and bears failing to force a meaningful break of yesterday’s low in futures.
- Still, yields remain higher across the curve after this morning’s labour market readings.
- We maintain our base case for a BoE cut in August despite this morning’s data and yesterday’s domestic CPI prints, while continuing to lean towards quarterly cuts (August & November) through year-end.
- Gilt futures pierced initial support at yesterday’s low at 91.17, basing at 91.14 before a recovery to 91.35.
- Bears remain in technical control and a fresh extension lower would target Fibonacci support (90.97).
- Yields 1.5-3bp higher on the day, bear flattening. Benchmarks are 2-3bp off session highs.
- BoE-dated OIS continues to price over 80% odds of a cut for the August meeting, with such a move fully discounted come the end of the September MPC. Just under ~50bp of cuts showing through year-end vs. Monday’s dovish extremes of ~58bp. Market remains happy discounting 1x 25bp cut per quarter through year-end, with Bailey’s dovish commentary help limit hawkish adjustments in the wake of this week’s domestic data.
- Early SONIA option flow has been dominated by upside/dovish exposure in SFIZ5 & H6.
- Little of note on the UK calendar for the remainder of the day, which will leave focus on ongoing adjustment to the labour market data and broader macro inputs.
BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
Aug-25 | 4.004 | -21.3 |
Sep-25 | 3.965 | -25.2 |
Nov-25 | 3.805 | -41.2 |
Dec-25 | 3.727 | -49.0 |
Feb-26 | 3.600 | -61.7 |
Mar-26 | 3.568 | -64.9 |
EGBS: Passing of Supply and Equity Pullback Helps Bunds Off Lows
Smooth digestion of today’s Spanish and French nominal supply alongside a pullback in European equity futures has helped Bunds away from session lows. However, RXU5 remains -2 ticks today at 129.60, with a bearish technical theme still intact. Initial support to watch is 129.08, the Jul 14 low.
- Overnight weakness came alongside US Treasuries, following some hawkish leaning commentary from NY Fed President Williams.
- German yields are up to 1.5bps higher, displaying a light steepening bias. 30-year yields found support at the October 2023 highs (3.263%) earlier this week, and this level remains a key resistance to watch.
- 10-year EGB spreads to Bunds are biased up to 1bp wider, with PGBs and OATs underperforming.
- Yesterday evening, Germany rejected the EU’s E2trln budget proposal for 2028-2034, just hours after it was announced. While Germany is traditionally a fiscal hawk, it presents some tension with Chancellor Merz’s plans to significantly increase domestic fiscal capacity over that time period. Nonetheless, the FT has reported significant infighting amongst EU members as negotiations around the EU budget begin in earnest.
- The FT also reported that the EU is preparing a list of potential tariffs on US services. The MNI Policy Teams latest exclusive has examined the increasing support around retaliation.
- Eurozone final June HICP confirmed flash estimates, with core at 2.3% Y/Y.
FOREX: Dollar Erodes Trump-Powell Induced Selloff, AUD Underperforms
- The US dollar is on the front foot again Thursday, having eroded the majority of the sharp selloff induced by the Trump-Powell headlines late yesterday. The USD index trades 0.3% in the green but highs overnight remained just shy of the recovery highs posted at 98.91. The narrative around the potential firing of Federal Reserve Chair Jerome Powell has reintroduced a key bearish catalyst for the dollar, although Trump’s pushback has provided short-term stability.
- The primary driver for AUD (-0.86%) underperformance overnight has been the weaker-than-expected jobs report and the notable uptick in the unemployment rate, which have bolstered RBA easing expectations. For AUDUSD, today’s move below the 50-day EMA (intersects at 0.6490) appears meaningful, and a daily close below this average would be the first in over three months, highlighting a stronger reversal. The initial target for the move would be 0.6435 (Fib retracement) before 0.6373, the Jun 23 low and technical bear trigger.
- Elsewhere, the broad based usd strength has been notable against the Japanese yen, with USDJPY bouncing over 1% from yesterday’s lows. Yesterday’s highs at 149.17 will remain the short-term reference point above as markets await trade discussions between US/Japan officials and this weekend’s upper house election.
- The next focus will be on 149.38, the 50.0% retracement of the Jan 10 - Apr 22 bear leg, and 150.49, the Apr 2 high.
- GBP moderately outperforms on the back of this morning’s labour market data, which was a little firmer-than-expected on net and reduced any residual odds of sequential BoE cuts at this stage. With that said, GBPUSD remains around the 1.3400 mark, within close proximity of the recent lows at 1.3365.
- Later today, US retail sales, Philly Fed manufacturing and import prices highlight the calendar, alongside various Fed speakers.
EQUITIES: Futures Mixed, E-mini Holds Bounce Off Weds Lows
S&P E-Minis are still trading in a range, closer to their recent highs. The trend condition remains bullish. Recent activity has resulted in a break of resistance at 6128.75, the Jun 11 high. The breach confirmed a resumption of the uptrend that started Apr 7. A bull cycle in Eurostoxx 50 futures remains in play and the latest pullback still appears corrective. Support to watch lies at 5281.00, the low on Jul 1 and 4. A clear break of this price point would strengthen a bearish threat.
- Japan's NIKKEI closed higher by 237.79 pts or +0.6% at 39901.19 and the TOPIX ended 20.41 pts higher or +0.72% at 2839.81.
Elsewhere, in China the SHANGHAI closed higher by 13.048 pts or +0.37% at 3516.825 and the HANG SENG ended 18.81 pts lower or -0.08% at 24498.95. - Across Europe, Germany's DAX trades higher by 212.56 pts or +0.89% at 24222.75, FTSE 100 higher by 40.92 pts or +0.46% at 8967.31, CAC 40 up 69.99 pts or +0.91% at 7791.65 and Euro Stoxx 50 up 45.25 pts or +0.85% at 5343.2.
- Dow Jones mini down 65 pts or -0.15% at 44389, S&P 500 mini up 0.75 pts or +0.01% at 6304.25, NASDAQ mini up 23.5 pts or +0.1% at 23100.75.
COMMODITIES: WTI Sticks Closely to 200-dma
A bull cycle in Gold that started Jun 30, remains intact and the yellow metal is holding on to the bulk of its recent gains. Note that medium-term trend conditions are bullish - moving average studies are in a bull-mode position highlighting a dominant uptrend. A bearish tone in WTI futures remains intact. The sharp reversal from the Jun 23 high continues to highlight scope for an extension lower and this suggests that recent gains have been corrective.
- WTI Crude up $0.06 or +0.09% at $66.46
- Natural Gas up $0.02 or +0.65% at $3.578
- Gold spot down $15.48 or -0.46% at $3331.57
- Copper down $1.3 or -0.24% at $551.15
- Silver down $0.08 or -0.2% at $37.8237
- Platinum down $10.47 or -0.74% at $1412.01
| Date | GMT/Local | Impact | Country | Event |
| 17/07/2025 | 0900/1100 | *** |  EU | HICP (f) |
| 17/07/2025 | 0900/1000 | ** |  GB | Gilt Outright Auction Result |
| 17/07/2025 | - | EU | ECB Cipollone At G20 Meeting | |
| 17/07/2025 | 1230/0830 | *** |  US | Jobless Claims |
| 17/07/2025 | 1230/0830 | ** | US | WASDE Weekly Import/Export |
| 17/07/2025 | 1230/0830 | * |  CA | International Canadian Transaction in Securities |
| 17/07/2025 | 1230/0830 | *** | US | Retail Sales |
| 17/07/2025 | 1230/0830 | ** | US | Import/Export Price Index |
| 17/07/2025 | 1230/0830 | ** | US | Philadelphia Fed Manufacturing Index |
| 17/07/2025 | 1230/0830 | *** | US | Retail Sales |
| 17/07/2025 | 1315/0915 | US | Fed Governor Adriana Kugler | |
| 17/07/2025 | 1400/1000 | * | US | Business Inventories |
| 17/07/2025 | 1400/1000 | ** | US | NAHB Home Builder Index |
| 17/07/2025 | 1400/1000 | * | US | Business Inventories |
| 17/07/2025 | 1430/1030 | ** | US | Natural Gas Stocks |
| 17/07/2025 | 1530/1130 | ** | US | US Bill 04 Week Treasury Auction Result |
| 17/07/2025 | 1530/1130 | * | US | US Bill 08 Week Treasury Auction Result |
| 17/07/2025 | 1645/1245 | US | San Francisco Fed's Mary Daly | |
| 17/07/2025 | 1730/1330 | US | Fed Governor Lisa Cook | |
| 17/07/2025 | 2000/1600 | ** | US | TICS |
| 17/07/2025 | 2230/1830 | US | Fed Governor Christopher Waller | |
| 18/07/2025 | 2330/0830 | *** |  JP | CPI |
| 18/07/2025 | 0600/0800 | ** |  DE | PPI |
| 18/07/2025 | 0800/1000 | ** | EU | EZ Current Account |
| 18/07/2025 | 0900/1100 | ** | EU | Construction Production |
| 18/07/2025 | - | EU | ECB Cipollone At G20 Meeting | |
| 18/07/2025 | 1230/0830 | *** | US | Housing Starts |
| 18/07/2025 | 1230/0830 | *** | US | Housing Starts |
| 18/07/2025 | 1400/1000 | *** | US | U. Mich. Survey of Consumers |
| 18/07/2025 | 1400/1000 | ** | US | University of Michigan Surveys of Consumers Inflation Expectation |
| 18/07/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
| 18/07/2025 | 1700/1300 | ** | US | Baker Hughes Rig Count Overview - Weekly |
