The U.S. reached several trade agreements, and the EU is ready for counter-attack

The dollar rose on Friday, supported by strong economic data, which suggests that the Fed may remain patient in resuming interest rate cuts, coupled with progress in tariff negotiations that have made the trade situation clearer and alleviated market uncertainty.

Data showed that U.S. core capital finance orders fell unexpectedly in June, but shipments increased moderately, indicating a sharp slowdown in corporate equipment spending in the second quarter. The US dollar responded plainly to the data.

Elias Haddad, senior market strategist at BrownBrothers Harriman in London, said, "The dollar has rebounded in the past two days after being on the defensive earlier this week, mainly supported by a series of encouraging U.S. economic data that suggests the Fed should continue to be patient."

The dollar will record its biggest weekly decline in a month ahead of more tariff negotiations and central bank meetings next week, while the pound has fallen, with previously released UK retail sales data weaker than expected.

The Fed and the Bank of Japan are expected to keep interest rates unchanged at next week's policy meeting, but traders will focus on post-meeting vejck.cnments to determine the timing of next move.

Bank Paribas wrote in a research note: "We believe there is some room for optimism in the (Federal) meeting. Economic uncertainty related to trade policy, although not yet fully resolved, has dropped significantly."

Politics is one of the factors affecting the two major central banks, especially in the United States, where U.S. President Trump clashed with Fed Chairman Powell on Thursday, again demanding lower interest rates.

Forex Market:The US dollar index showed a downward trend this weekThe trend closed at 97.66, recording the largest single-week decline in four weeks. The market expects that the Federal Reserve will continue to remain unmoved next week without political pressure. The United States has reached a trade agreement with Japan, the Philippines, Indonesia and other countries, the prospects for negotiations with the EU are optimistic, and the safe-haven attributes of the US dollar have weakened. In terms of non-US currencies, affected by the defeat of the ruling coalition of Japan's Senate election and the US-Japan trade agreement, the US dollar fell against the Japanese yen this week, hitting a low of 145.85, the first time in four weeks. The euro, pound and Australian dollar all recorded gains against the dollar this week, boosted by a weak dollar.

Gold Market:Spot gold closed at $3336.72 per ounce, rising first and then falling this week, with a cumulative decline of 0.41%. At the beginning of the week, gold rose to a five-week high, driven by weaker US dollar and downward yields, but the subsequent tariff agreement brought gold back.

Crude oil market: International oil prices have rebounded slightly after falling under pressure, and the overall situation is expected to change little. The easing of international trade situation and a decline in U.S. crude oil inventories exceeded expectations, but other pending trade talks and uncertainties in Russia-Ukraine negotiations have limited further oil prices.

Review of the week's news

1. Trump's tariff trends: 15% is imposed, an agreement is reached with Japan, and the EU plans countermeasures

U.S. President Trump announced this week that he will set a new "reciprocal tariff rate" system before August 1, with the tariff range between 15% and 50%. Among them, a few countries with "bad relations" with the United States will apply up to 50%.

This move marks a more radical step in the Trump administration’s global trade policy, implementing a higher level of punitive taxation for countries that fail to establish a cooperation framework with the United States. In addition, Trump also plans to send about 200 "tariff letters" to global trading partners in the next few days, and said that the possibility of reaching a US-EU trade agreement is close to 50%.

On Tuesday, Trump announced a bilateral trade deal with Japan that it calls “the largest deal ever.” According to Trump, a 15% tariff will be imposed on Japanese goods, while Japan promises to invest $550 billion in the United States.

In response, Japanese Prime Minister Shigeru Ishiba responded that he would lower import tariffs on U.S. cars from the current 25% to 15%. He said that Japan will carefully evaluate the content of the agreement and hold phone calls or face-to-face talks with President Trump if necessary.

In addition to Japan, Trump also announced a bilateral trade agreement with the Philippines and Indonesia this week. The agreement with the Philippines is the fifth trade agreement it signed in the past three months, including the US imposing a 19% tariff on Philippine imported goods, while the Philippines is fully exempt from American products. Indonesia agreed to lift tariff barriers on 99% of US products, adjust non-tariff barriers, and accept US motor vehicle safety standards.

2. Trump inspected the Federal Reserve Building and overspending projects with PowellConfrontation and promote interest rate cuts

On Thursday, US President Trump visited the Federal Reserve headquarters in a rare event and confronted Chairman Powell on the cost of the headquarters renovation project. Trump pointed out that the project budget has soared to $3.1 billion, while Powell retorted that the data is inaccurate and that the two sides openly disagree in front of the media.

Trump said in a half-joking tone that such a serious overspending usually leads to the dismissal of the project manager, but stressed that the remarks were not directed at Powell personally, but hoped that the project would go smoothly as planned.

During the inspection, Trump once again publicly urged the Federal Reserve to cut interest rates. He said that although there is indeed a "luxury" part of the renovation process, he understood some of the rising costs due to security requirements and the vejck.cnplexity of underground construction. He also reiterated that the talks with Powell were "good" and said that the overspending of the renovation was not enough to constitute a reason to replace Powell, emphasizing that he did not want to link these two things and just wanted to see interest rates have to drop.

Trump said: "I think we had a very good talk on the interest rate issue. Powell told me very clearly... 'The country is developing well'", he understood that this means Powell will start to recommend lower interest rates.

Just the day before, Trump once again criticized Powell on social platforms, accusing his refusal to cut interest rates, causing pressure on American families and increasing the national interest burden. He claimed that if interest rates can drop by 3 percentage points, the United States will save $1 trillion a year.

But the Wall Street Journal reporter Nick Timiraos, known as the "Federal Message Bucket", pointed out that this statement lacks a realistic basis. The United States' interest expenditure in 2024 has reached $1.1 trillion, and it is difficult to achieve significant cuts.

The controversy surrounding the Fed's renovation project has heated up rapidly this week. Rep. Anna Paulina Luna, Republican of Florida, has formally filed a motion for criminal charges to the Justice Department, accusing Powell of providing false testimony at a congressional hearing. US Treasury Secretary Bescent also publicly criticized that an institution that lost more than $100 billion a year spent huge amounts of money to renovate its office building, and that the Federal Reserve's non-monetary policy behavior must be subject to a vejck.cnprehensive review.

3. Shigeru Ishiba reiterated his resignation and responded to rumors of resignation. Japanese Prime Minister Shigeru Ishiba reiterated his resignation on the 23rd, saying that the report on his resignation was false. Previously, several Japanese media quoted sources as saying Shigeru Ishiba intends to resign before the end of August to take responsibility for the failure of the ruling coalition's Senate election.

The Daily News said that the Liberal Democratic Party will summarize the election situation in August, and Shigeru Ishiba has basically confirmed his resignation. Kyodo News also called his resignation "inevitable" and he may announce his decision in August. Shigeru Ishiba expressed his apology for the election defeat on the 21st, but also said that he would continue to serve as prime minister to deal with issues such as Japan-US tariff negotiations and rising prices, and said that he would analyze the reasons for the defeat.

Shigeru Ishiba said on the 23rd that he would not vejck.cnment on the "stay or leave issue" before carefully studying the content of the US-Japan trade agreement. "Yomiuri Shimbun" and other reports, He plans to deal with the issue of responsibility for election losses after reaching a trade agreement between Japan and the United States.

On the afternoon of the 23rd, after meeting with senior party officials, Shigeru Ishiba made it clear that he would continue to stay in office, saying that the media's reports on his resignation "has no factual basis" and that the talks did not involve resignation. He stressed that in order to deal with current problems and avoid political gaps, he will perform his duties as prime minister.

The ruling coalition won only 47 seats in the Senate election, and the non-reelected seats have not yet exceeded half, becoming a minority government. This is the first time since its establishment in 1955 that the Liberal Democratic Party has lost its majority in both houses at the same time. A Kyodo News poll showed that Shibashi Ishiba's cabinet support rate fell to 22.9%, and 51.6% of respondents believed that he "should resign."

The Liberal Democratic Party also calls for its resignation, and some members of parliament and branch associations have publicly demanded Shigeru Ishiba to step down. According to the Liberal Democratic Party Constitution, if more than half of the Liberal Democratic Party members of the MP and more than half of the representatives of the prefecture and county branch associations request the election of a new president, the new president can be elected, which is equivalent to the removal of the current president.

4. "Landmines" on the Thai-Cambodia border were detonated!

On July 24, fierce conflict broke out between Cambodia and Thailand, and the situation escalated sharply. Thailand said the conflict has killed at least 11 people and injured 28 people.

Thai acting Prime Minister Putan said that Cambodia took the lead in firing and using heavy weapons, but the Thai side is still willing to resolve the problem through peaceful negotiations while defending national sovereignty. The Thai Foreign Ministry accused Cambodia of violating international law and demanded that it stop attacks and assume responsibility for conflict, otherwise the Thai side will take higher levels of self-defense measures.

The Thai Army said on social media on the 24th that Cambodia fired rockets at a vejck.cnmunity in Surin Mansion, Thailand that morning, and the Thai side then dispatched Air Force F-16 fighter jets to destroy two military facilities in Cambodia. Meanwhile, Cambodian Senate Chairman Hun Sen said that the border areas between Odo Mianji and Paveisha provinces in Cambodia were bombarded by Thailand, and he urged the people to remain calm and not to hoard goods or raise prices.

The two countries have different opinions on the origin of the conflict. The Thai Army said Cambodia was the first to fire, while a spokesperson for the Cambodian Ministry of Defense said that the Thai army launched the first attack, and the Cambodian army only operated within the scope of self-defense.

Early on the 23rd, Thailand had ordered the reduction of its diplomatic relations with Cambodia, recalling its ambassador to Cambodia and expelling its ambassador to Thailand. On the 24th, Cambodia also decided to reduce diplomatic relations with Thailand to a minimum level and recall diplomatic personnel in Bangkok. Cambodian Prime Minister Honmanai wrote to the UN Security Council, accusing Thailand of violating international law and calling for an emergency meeting.

On Friday, Thailand's acting Prime Minister Putan expressed confidence that the current armed conflict on the Thai-Cambodia border will not escalate into a full-scale war between the two countries. Putan also said that Thailand is still willing to engage in dialogue with Cambodia. But he stressed that any dialogue must be based on the premise that Cambodia will first stop military operations.

On the night of the 25th, the Cambodian Ministry of Defense issued a statement saying that on July 24, Thailand issued a statement to CambodiaDeliberate, unreasonable and illegal military attacks were carried out. This act violates Cambodia's sovereignty and territorial integrity and violates the Charter of the United Nations. On the morning of July 26 local time, Thailand and Cambodia exchanged fire again on the border areas of the two countries. The Thai military said that Cambodian soldiers first opened fire on Thai soldiers, and the Thai army then fought back.

5. Gaza ceasefire negotiations are in a deadlock again, France intends to recognize the Palestinian State

U.S. Middle East Peace Envoy Witkov said on Thursday that he was recalling a US negotiator from the Qatar capital Doha to return to the United States for consultations, citing Hamas "lack of the will to reach a ceasefire in Gaza." The Israeli Prime Minister's Office also later announced that it would recall its negotiating team to return to the country for further internal consultations.

Although Hamas has vejck.cnpromised on certain key issues, including giving up its persistence on a long ceasefire and instead demanding that the U.S. promise to extend the initial 60-day truce period by another 60 days to gain more time to negotiate political and security arrangements in the post-war Gaza Strip, the overall dialogue has not yet achieved substantial breakthroughs.

In the latest round of negotiations, there are still many core differences unresolved. Israel insists on setting up a buffer zone on the Egyptian border "Philadelphia Corridor" and refuses the United Nations to participate in the distribution of humanitarian aid, accusing some of its agencies of connection with Hamas. Hamas demands that the distribution of aid must be regulated by the United Nations and the Red Crescent Society, opposing the so-called "Humanitarian Foundation" jointly established by the United States and Israel.

According to the United Nations, the current conflict at the distribution point has killed more than 670 people. The US believes that this foundation mechanism will help weaken Hamas' control of materials; while humanitarian organizations warn that as many as 93% of Gaza residents are at risk of severe famine.

French President Macron announced on Thursday that he plans to formally recognize the State of Palestine during the United Nations General Assembly in September and said he will use this to promote the Middle East peace process. He made the decision public on social platform X and wrote a letter to Palestinian Authority Chairman Mahmoud Abbas, stressing that France will take the lead in taking the recognition and strive to persuade other allies to follow up. As the country with the largest population of Jewish and Muslims in Europe, France may become the first major Western country to recognize the Palestinian state.

This move immediately aroused strong dissatisfaction from Israel. Israeli Prime Minister Benjamin vejck.cnanyahu has severely criticized the decision, calling it a "reward for terrorism" and warned it that it might give birth to another "Iranian agent." Defense Minister Isreir Katz also said that France's actions "equivalent to bowing to terrorism" and reiterated that Israel would never accept the establishment of "Palestinian entities that threaten national security and survival" at its borders.

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