North American Summary and Highlights 7 Jul
Overview - The USD was stronger, particularly after Trump announced tariffs against various countries, starting with Japan and South Korea. USD/JPY led the way but gains there were steady through the day with the tariff announcement having more initial impact elsewhere.
North American session
The USD saw some recovery from European lows in the North American morning, particularly in the riskier currencies though USD/JPY continued to move steadily higher. The afternoon saw Trump announce tariffs starting on August 1 firstly against Japan and South Korea, both at 25%, followed by announcements against other countries, including 30% for South Africa and 25% for Malaysia. The tariff levels announced were generally close those originally announced on April 2.
USD/JPY saw only a limited response to the announcement but its rally extended above 146. The USD advanced elsewhere, EUR/USD falling below 1.17 before correcting to around 1.1725 assisted by a Reuters report that the EU would not be receiving a tariff letter from Trump. Weakness in equities saw AUD and CAD test European lows versus the USD though GBP/USD found support below 1.36.
European morning session
The USD made general gains through the European morning. EUR/USD dropped 40 pips to 1.1730 and USD/JPY gained 45 pips to 145.45. GBP gained a little against the EUR in sympathy with the USD, with EUR/GBP dropping to 0.8630 from 0.8640, although GBP/USD also lost 30 pips to 1.3590.
The SEK was the best performer in the session, with EUR/SEK dropping 1% to 11.17 after the Swedish CPI data early in the session showed a much larger than expected rise to 2.9% in the targeted CPIF measure, further reducing expectations of an August Riksbank rate cut. Otherwise, the only significant data was German industrial production, which came in stronger than expected at 1.2% m/m, suggesting that the trend is continuing to improve gradually, but this had no FX market impact. Eurozone Sentix investor confidence improved in July, reaching its highest since February 2022, while Eurozone retail sales were marginally above consensus at -0.7% m/m in May.