MNI US OPEN - Tariff Guidance Out, DXY Awaiting Inputs
EXECUTIVE SUMMARY:
- TRUMP ADMIN POSTS GUIDANCE AHEAD OF TARIFF ROLLOUT
- JAPAN DITCHES HISTORIC RICE PRODUCTION CURBS, COULD SOOTHE FOOD INFLATION
- USD INDEX AWAITING INPUT FROM TRUMP APPOINTMENTS
- UK 10Y GILT AUCTION SEES SOLID DEMAND
Figure 1: French industrial production rising at fastest pace in years on Y/Y basis
NEWS
US (BBG): Trump Administration Posts Guidance Ahead of Tariff Rollout
President Donald Trump’s expanded reciprocal tariffs will not apply to any products loaded onto a vessel for transport into the US before 12:01 a.m. New York time on Thursday, according to guidance issued by US Customs and Border Protection. The notice, posted by the federal government on Monday, outlines implementation of the tariffs Trump announced last week, which are expected to ratchet up levies on dozens of trading partners.
EU/US (MNI): EU Official Talks On US Trade Deal Framework:
Reuters reports comments from an EU official. Claims "We are already seeing the implementation of the EU-US framework trade deal." Official: "In the US executive order, you are seeing [an] all-inclusive tariff rate of 15%...This means that the most-favoured nation rate is included within this US 15% tariff rate." Says "This US framework trade deal creates immediate relief while we work out [the] formal details."
US (WSJ): White House Preps Order to Punish Banks That Discriminate Against Conservatives
The White House is preparing to step up pressure against big banks over perceived discrimination against conservatives and crypto companies with an executive order that threatens to fine lenders that drop customers for political reasons. A draft of the executive order, which was viewed by The Wall Street Journal, directs bank regulators to investigate whether any financial institutions might have violated the Equal Credit Opportunity Act, antitrust laws or consumer financial protection laws.
FRANCE (BBG): French Auditors Call for Credible Government Forecasts: Echos
Financial experts at the Cour des comptes, France’s official auditors, are calling on the finance ministry to be more realistic in its forecasts, after they missed targets in the last two years, Les Echos reported. The ministry is defending its position: Echos.
JAPAN (BBG): Japan Ditches Historical Rice Curbs With Ishiba’s Fate at Stake
In a break from a decades-old policy, the Japanese government will encourage farmers to disregard a de facto cap on rice production and boost cultivation of the food staple, a step that could win support from the agriculture sector and soothe consumers’ frustration over soaring living costs.
JAPAN/US (BBG): Japan’s Akazawa to Visit US to Press on Car Levy Cut Timing
Japan’s top trade negotiator is set to leave for the US on Tuesday as Tokyo aims to urge Washington to proceed with a cut to tariffs on cars as promised in last month’s trade deal. Ryosei Akazawa’s trip to Washington will be his first following the announcement of the trade agreement. The deal, reached after his eighth visit to the US capital since April, resulted in a pledge by the US to assess a 15% tariff on most imports of Japanese goods.
JAPAN (BBG): Japan Panel Urges Record Minimum Pay Hike in Bright Sign for BOJ
A panel advising Japan’s government called for a record increase to the minimum wage for a second straight year, sending a positive signal to the Bank of Japan as it pursues demand-led economic growth. The advisory panel to the Labor Ministry proposed on Monday raising the average minimum hourly wage for the current fiscal year by ¥63 ($0.43) to ¥1,118. The 6% hike would be the largest gain since the government began setting hourly wage targets in 1978 and would follow last year’s 5% bump, the previous record.
BOJ (MNI): BOJ Minutes: A Few Members Note Rate Hike Return
A few Bank of Japan board members said they would consider resuming interest rate hikes if trade tensions were expected to ease without further escalation, according to minutes of the June 16-17 meeting released on Tuesday. However, the minutes offered no indication on the timing or pace of future rate increases.
DATA
MNI: FRANCE JUN INDUSTRIAL PRODUCTION +3.8% M/M, +2% Y/Y
FRANCE JUN MANUFACTURING OUTPUT +3.5% M/M, +2.4% Y/Y
MNI: EUROZONE JUN PPI +0.8% M/M, +0.6% Y/Y
UK DATA: Upward Revision To July Services PMI, But Labour Mkt Details Weak
- Although the UK July services PMI was revised up to 51.8 (vs 51.2 flash), it was still below the 52.8 in June and continues to point to weakening labour market conditions. The release notes that this was the "sharpest decline in employment since February".
BONDS: 10-year Gilt/Bund Spread Tightens Post Auction
Solid demand at today’s 10-year Gilt auction helps the Gilt/Bund spread fully unwind early widening. The spread is now 0.5bps tighter on the session at 188bps, after reaching a high of 190bps ahead of the Gilt supply.
- 10-year Gilt yields are currently 4.51%, eyeing another test of the 4.50% level which provided support earlier this morning. The UK curve is lightly twist flatter, with 2-year yields up 0.5bps.
- German yields are up to 1bp higher across the curve, ahead of E5bln 1.90% Sep-27 Schatz supply at 1030BST.
- 10-year EGB spreads to Bunds are within 0.5bps of yesterday’s closing levels. Austria sold 8/10-year RAGBs this morning.
- Gilt and Bund futures are up to 5 ticks above yesterday’s settlement levels, still holding onto most of Friday’s US labour market report-inspired rally. A bullish theme is currently intact in both contracts.
- Today’s regional data calendar has been heavy, but not very market moving. Industrial production was stronger-than-expected in France and Spain, while the Eurozone final July services/composite PMIs saw marginal downward revisions. Eurozone June PPI was 0.8% M/M (vs 0.9% cons, -0.6% prior).
- The UK final July services PMI was revised up to 51.8 (vs 51.2 flash), but labour market details remain weak.
- Broader focus remains on Thursday’s BOE decision. MNI preview here.
FOREX: USD Index Awaiting Directional Input from Trump's Appointments
- Markets are in consolidation mode Tuesday, with the USD Index holding well above the weekly low. Focus for markets near-term is on the trajectory of the USD from here: whether the USD shift lower on NFP is the start of a resumption of the YTD downtrend, or a corrective pullback as part of the recovery off the oversold condition. This leaves Trump's appointments at both the BLS and Fed this week in sharper focus - as he's expected to appoint a governor to replace Kugler that favours his preference for lower policy rates, as well as a BLS head willing to look into Trump's concerns over government data.
- As a result, the key parameters for the USD Index remain unchanged: the 50-dma undercuts as support at 98.293, while 99.241 marks the 50% retracement for the NFP downleg.
- CHF remains a currency of concern as the Swiss-US governments are yet to reach a broader trade agreement after the installation of 39% tariffs on Swiss exports to the US. The Swiss Franc is among the poorest performers in G10 for a second consecutive day despite yesterday's firmer-than-expected Swiss July CPI print. While USDCHF continues to hover around its 0.8092 50-dma, Franc weakness arguably stands out the most against the Japanese Yen, with CHFJPY losses over the last three sessions exceeding 2.1%.
- A swift tariff resolution here is expected to prove CHF positive - but for now, notable tariff premia holds over the currency.
- The session ahead sees ISM Services Index data - currently expected to rise to 51.5 from 50.8 prior, although prices paid is seen moderating slightly. US and Canadian trade balance stats also cross.
EQUITIES: EStoxx 50 More Stable After Breaking Bear Trigger
E-mini S&P sold off sharply Friday on the back of the soft NFP print - pushing prices through mid-July lows in the process. This puts price well clear of support at the 20-day EMA, at 6329.81, signaling scope for a deeper retracement. The trend condition in Eurostoxx 50 futures faltered Friday, with short-term weakness resulting in a break of the bear trigger. Having shown below 5194.00, the Jun 23 low, the April 30 hi/lo range at 5078-5138 becomes the area of downside interest.
- Japan's NIKKEI closed higher by 258.84 pts or +0.64% at 40549.54 and the TOPIX ended 20.34 pts higher or +0.7% at 2936.54.
Elsewhere, in China the SHANGHAI closed higher by 34.289 pts or +0.96% at 3617.598 and the HANG SENG ended 169.08 pts higher or +0.68% at 24902.53. - Across Europe, Germany's DAX trades higher by 91.77 pts or +0.39% at 23869.65, FTSE 100 higher by 24.21 pts or +0.27% at 9156.94, CAC 40 up 11.25 pts or +0.15% at 7645.21 and Euro Stoxx 50 up 7.08 pts or +0.14% at 5251.5.
- Dow Jones mini up 32 pts or +0.07% at 44343, S&P 500 mini up 6.75 pts or +0.11% at 6363.75, NASDAQ mini up 32.5 pts or +0.14% at 23332.
COMMODITIES: WTI Futures Sold for Third Consecutive Session into Monday Close
WTI futures fell for a third session into the Monday close, keeping S/T momentum pointed lower. Support to watch remains the 50-day EMA, at $65.48. The average has been pierced, a clear break of it would expose $58.17, the May 30 low. Gold benefited from the soft NFP print on Friday, returning prices toward the top-end of the recent range. This supports the view that short-term weakness is corrective - for now - and a bull cycle that started Jun 30 remains intact.
- WTI Crude down $0.1 or -0.15% at $66.2
- Natural Gas up $0.03 or +1.13% at $2.965
- Gold spot down $1.98 or -0.06% at $3371.33
- Copper down $0.75 or -0.17% at $443.25
- Silver up $0.08 or +0.21% at $37.487
- Platinum down $6.89 or -0.52% at $1326.77
| Date | GMT/Local | Impact | Country | Event |
| 05/08/2025 | 0830/0930 | ** |  GB | S&P Global Services PMI (Final) |
| 05/08/2025 | 0830/0930 | *** | GB | S&P Global/ CIPS UK Final Composite PMI |
| 05/08/2025 | 0900/1100 | ** |  EU | PPI |
| 05/08/2025 | 0900/1000 | ** | GB | Gilt Outright Auction Result |
| 05/08/2025 | 1230/0830 | ** |  US | Trade Balance |
| 05/08/2025 | 1230/0830 | ** |  CA | International Merchandise Trade (Trade Balance) |
| 05/08/2025 | 1230/0830 | ** | US | Trade Balance |
| 05/08/2025 | 1255/0855 | ** | US | Redbook Retail Sales Index |
| 05/08/2025 | 1345/0945 | *** | US | S&P Global Services Index (final) |
| 05/08/2025 | 1345/0945 | *** | US | S&P Global US Final Composite PMI |
| 05/08/2025 | 1400/1000 | *** | US | ISM Non-Manufacturing Index |
| 05/08/2025 | 1530/1130 | ** | US | US Treasury Auction Result for 52 Week Bill |
| 05/08/2025 | 1700/1300 | *** | US | US Note 03 Year Treasury Auction Result |
| 06/08/2025 | 2330/0830 | ** |  JP | average wages (p) |
| 06/08/2025 | 0600/0800 | ** |  DE | Manufacturing Orders |
| 06/08/2025 | 0730/0930 | ** | EU | S&P Global Final Eurozone Construction PMI |
| 06/08/2025 | 0800/1000 | * |  IT | Industrial Production |
| 06/08/2025 | 0830/0930 | ** | GB | S&P Global/CIPS Construction PMI |
| 06/08/2025 | 0900/1100 | ** | EU | Retail Sales |
| 06/08/2025 | 1100/0700 | ** | US | MBA Weekly Applications Index |
| 06/08/2025 | 1430/1030 | ** | US | DOE Weekly Crude Oil Stocks |
| 06/08/2025 | 1430/1030 | ** | US | US DOE Petroleum Supply |
| 06/08/2025 | 1700/1300 | ** | US | US Note 10 Year Treasury Auction Result |
| 06/08/2025 | 1800/1400 | US | Boston Fed's Susan Collins | |
| 06/08/2025 | 1800/1400 | US | Fed Governor Lisa Cook | |
| 06/08/2025 | 1910/1510 | US | San Francisco Fed's Mary Daly |
