Trump threatens Bric band with extra tariffs
Oil / Middle East
Other:
- Reserve Bank of New Zealand Shadow Board advises RBNZ to hold rates steady this week
- Goldman Sachs says US jobs data reinforces Fed patience – labor market shows resilience
- Wall Street Journal says “Elon Musk Is Running Out of Road in China”
- Australian job ads hit one-year high, signalling labour market resilience
- China restricts government purchases of medical devices from European Union – retaliation
- PBOC sets USD/ CNY reference rate for today at 7.1506 (vs. estimate at 7.1626)
- ICYMI – OPEC+ hiked output more than expected. What will they do next?
- China 14 point plan to promote expansion of service industry, promote rural revitalization
- Reserve Bank of Australia expected to cut its cash rate on Tuesday – why they might not
- Japan May real wages fell the most in 2 years
- PM Carney says new oil pipeline proposal in Canada is highly likely
- Japan’s top trade negotiator Akazawa, held two intense phone talks with Lutnick
- ECB’s Makhlouf said that the euro is not yet ready to replace the US dollar
- Financial Times: China reroutes exports via south-east Asia in bid to dodge Trump tariffs
- Economic calendar in Asia Monday, July 7, 2025 – Japan wages data
- Trade ideas thread – Monday, 7 July, insightful charts, technical analysis, ideas
- Monday open levels, indicative FX prices, 07 July 2025
- Newsquawk Week Ahead: Week Ahead: Trade deadlines, FOMC Minutes, RBA, RBNZ, Canada jobs
It was an eventful weekend and a busy session for markets, with several key developments driving sharp moves across assets.
The most dramatic came from former U.S. President Trump, who posted late Sunday U.S. time on Truth Social:
- “Any Country aligning themselves with the Anti-American policies of BRICS will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy.”
Major FX pairs had been trading in narrow ranges, but the U.S. dollar surged across the board following the post. USD/JPY, which had touched session lows around 144.25 earlier, spiked to 144.85, while yen crosses, including EUR/JPY, jumped—EUR/JPY traded above 170.40. AUD, NZD, CAD, and gold extended earlier losses, while EUR/USD held relatively steady near 1.1770.
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Early in the session oil prices dropped at the open of Globex trade. On the weekend OPEC+ had announced a larger-than-expected output hike following Saturday’s meeting—production will rise by 548,000 barrels per day in August, outpacing the expected 411,000 bpd increase. While prices haven’t extended the losses, they remain under pressure.
Tensions in the Middle East added to oil market unease. On Sunday, a cargo ship was attacked and set on fire in the Red Sea, prompting the crew to abandon it. The strike, which took place southwest of Yemen, bore the hallmarks of a Houthi operation, according to a security firm. In response, Israel launched airstrikes on Houthi positions in three Yemeni ports and a power station following an evacuation warning issued by the IDF.
Adding to trade uncertainty, Trump administration officials confirmed an extension of tariff negotiations. Treasury Secretary Scott Bessent said that if no deals are reached, tariffs will revert to April 2 levels starting August 1. Commerce Secretary Howard Lutnick echoed the timeline, noting Trump is finalising the exact rates. Letters will reportedly go out to over 100 smaller nations warning them of the shift.
In economic data, Japan reported that real wages fell in May by the most in nearly two years. While headline pay agreements reached in spring were the strongest in decades, many smaller firms without unions have yet to implement wage hikes, delaying their appearance in broader data. The wage drop adds pressure on already fragile consumption, despite recent signs of a spending rebound.
Brent with the gap opening lower:
Yen weakness too:
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