Australia and NZ Hold Rates, UK Growth Falters, U.S. Jobs Signal Resilience

Here’s your latest economic snapshot:

• • Australia and New Zealand held interest rates steady at 3.85% and 3.25%
• • U.K. GDP fell 0.1% in May, raising fears of a Q2 contraction
• • U.S. jobless claims dropped to 227K

Market Recap:

Australia Interest Rate Decision: The Reserve Bank of Australia kept interest rates unchanged at 3.85% in July, surprising markets that expected a rate cut. The decision passed by a 6–3 vote, with the RBA citing stable inflation risks and a strong labor market. However, the bank remains cautious due to ongoing uncertainty around demand and supply. Policymakers said they need more data to confirm inflation is on track to return to target and are ready to act if global events impact the economy. The RBA will continue monitoring economic trends closely.

New Zealand Interest Rate Decision: The Reserve Bank of New Zealand kept its cash rate steady at 3.25% in July, as expected. The decision reflects ongoing uncertainty and near-term inflation risks. Inflation was 2.5% in Q1—within the 1–3% target range—but is expected to rise temporarily before easing toward the 2% midpoint. The economy shrank 0.7% year-on-year in Q1, showing slight improvement. However, the RBNZ remains cautious, noting weak growth and uncertainty may hold back consumer and business activity.

U.S. Initial Jobless Claims: U.S. initial jobless claims dropped by 5,000 to 227,000 in early July, beating expectations and marking the lowest level in seven weeks. This signals continued strength in the labor market despite high interest rates. However, continuing claims rose by 10,000 to 1.97 million — the highest since 2021 — suggesting slower hiring. Claims from federal workers fell slightly, tying a 6-month low.

U.K. Gross Domestic Product (GDP) MoM: The UK economy shrank by 0.1% in May 2025, marking a second straight monthly decline after April’s 0.3% drop and raising concerns of a Q2 contraction. Industrial production fell sharply, with manufacturing down 1%, especially in pharmaceuticals and transport equipment. Construction also slipped 0.6%, while services rose 0.1%, helped by strong growth in tech-related sectors. Despite the monthly declines, GDP grew 0.5% over the three months to May.

Oil and Commodities:

Brent Crude: Oil edged up to $70.75 as investors awaited Trump’s statement on Russia, fueling geopolitical uncertainty.

Gold: Gold rose over 1% this week, closing at $3358, as investors sought safe-haven assets after Trump announced new tariffs.

Currency Watch:

EUR/USD: The euro dipped 0.1% to $1.1688 after Trump signaled the EU might be next to receive a letter outlining new tariff rates by Friday.

GBP/USD: Sterling slipped to 1.34860 as weak UK growth data boosted expectations of a rate cut.

USD/JPY:  The U.S. dollar rose 0.79% to 147.4 against the yen, heading for a weekly gain of nearly 2%, its strongest performance since early December.

Bitcoin tops $120,000 for the first time. Ethereum $3033

Preview of the Upcoming Week:

July 15, 2025

U.S. Consumer Price Index (CPI) YoY: Inflation in the U.S. rose to 2.4% in May, up from 2.3% in April, signaling persistent price pressures. Analysts expect it to reach 2.5% by the end of Q2, with a gradual decline projected in the coming years — 2.4% in 2026 and 2.3% in 2027, according to Trading Economics models.

📌 What to Watch:

Currency Pairs:

EUR/USD and GBP/USD could see increased volatility as traders reassess the Fed’s rate path.

USD/JPY may remain strong if U.S. inflation stays elevated and yields rise.

Commodities:

Gold (XAU/USD): May face pressure if expectations for Fed rate cuts are pushed back.

Oil (WTI, Brent): Sensitive to inflation-driven demand outlook and potential shifts in monetary policy.

Indices:

US30 (Dow Jones) and NASDAQ could react to inflation data as it shapes investor expectations on growth and interest rates.

July 16, 2025

U.K. Consumer Price Index (CPI) YoY: Inflation in the UK eased slightly to 3.4% in May, down from 3.5% in April. However, analysts expect a rebound to 3.9% by the end of Q2, before gradually falling to 2.3% in 2026 and 1.9% in 2027, according to Trading Economics projections.

📌 What to Watch:

Currency Pairs:

GBP/USD may remain under pressure if inflation rises again and growth continues to slow.

EUR/GBP could become more volatile as markets weigh ECB vs BoE policy shifts.

Commodities:

Gold (XAU/GBP): May gain traction as a hedge if UK inflation picks back up or growth weakens.

Oil (Brent): Could react to broader inflation trends impacting energy demand.

Indices:

FTSE 100: Sensitive to inflation-driven BoE policy outlook, particularly in rate-sensitive sectors like real estate and finance.

U.S. Producer Price Index (PPI) MoM: U.S. producer price inflation rose by 0.1% in May, rebounding from a -0.2% decline in April, signaling early signs of cost pressures in the supply chain. Analysts expect this figure to climb to 0.3% by the end of the quarter, with long-term forecasts pointing to 0.4% in 2026 and 0.2% in 2027.

📌 What to Watch:

Currency Pairs:

USD/JPY may find support if producer inflation reinforces expectations of sticky consumer prices and delays Fed rate cuts.

EUR/USD could decline if U.S. inflation pressures revive dollar demand.

Commodities:

Gold (XAU/USD): Typically reacts negatively to signs of rising producer inflation if it boosts yields.

Crude Oil (WTI): Watch for potential upstream cost impacts tied to commodity inputs.

Indices:

S&P 500: May experience volatility if PPI data signals inflation risk that could alter Fed policy expectations.

Dow Jones (US30): Especially sensitive if cost pressures hit industrial or manufacturing sectors.

July 17, 2025

Eurozone Consumer Price Index (CPI) YoY: Inflation in the Euro Area edged up to 2.0% in June from 1.9% in May 2025, returning to the European Central Bank’s official target. Analysts expect inflation to reach 2.1% by the end of the quarter, with longer-term forecasts pointing to 1.8% in 2026 and back to 2.1% in 2027.

📌 What to Watch:

Currency Pairs:

EUR/USD: The uptick in inflation could support the euro if markets anticipate fewer ECB rate cuts ahead.

EUR/GBP: May gain if the UK continues to show faster disinflation than the eurozone.

Bonds & Yields:

Rising inflation may pressure eurozone bond yields higher, especially German bunds.

Indices:

Euro Stoxx 50: Could face short-term pressure if rate expectations shift hawkish.

DAX & CAC 40: Watch for sectoral rotation, especially in rate-sensitive sectors like real estate and tech.

Commodities:

U.S. Initial Jobless Claims: Initial jobless claims in the U.S. fell to 227,000 in the week ending July 5, down from 232,000 the previous week, signaling continued labor market resilience. Analysts expect claims to rise to around 265,000 by the end of the quarter, but project a longer-term decline to 210,000 in 2026 and 190,000 in 2027.

📌 Market Implications:

USD Index (DXY):

A steady labor market may support the dollar in the short term, especially if paired with strong inflation data.

Currency Pairs:

USD/JPY and EUR/USD could be sensitive to further labor data surprises.

AUD/USD may weaken if U.S. employment remains solid and Fed rate cut bets fade.

Equities:

S&P 500 and NASDAQ may react cautiously if improving labor data delays Fed easing.

Gold (XAU/USD):

Could face headwinds if stronger jobs data supports a firmer dollar and higher yields.

U.S. Philadelphia Fed Manufacturing Index: The Philadelphia Fed Manufacturing Index held steady at -4 points in June, indicating continued weakness in the region’s manufacturing sector. Despite the stagnation, forecasts suggest a rebound, with the index expected to rise to 8.0 points by the end of this quarter and trend around 8.0 in 2026 and 9.0 in 2027.

📌 Market Implications:

USD Reaction:

Persistent softness in regional manufacturing may limit upside for the U.S. dollar, especially if confirmed by national PMI data.

Key Pairs to Watch:

EUR/USD: Could rebound if U.S. data disappoints and Eurozone growth surprises to the upside.

USD/CHF: May retreat if Fed rate cut expectations return due to sluggish manufacturing.

Commodities:

Gold (XAU/USD) may gain on economic uncertainty.

WTI Crude could be pressured if industrial demand remains weak.

Equities:

Weak factory data could weigh on industrial stocks, while fueling tech-led rallies if it nudges the Fed closer to rate cuts.

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