Asia mid-session: Tariff uncertainty weighs on Asia equities; Gold, Oil Slip as US dollar rebounds US_United_States_Government_Flag

Summary:

Most major Asia Pacific equity indices started the week on a weaker note, as investors turned cautious ahead of the expiration of the White House’s 90-day pause on higher global reciprocal tariffs (excluding China), scheduled for Wednesday, 9 July.

Asia Pacific equities (except Singapore) weaken as tariff uncertainty looms

Japan’s Nikkei 225 slipped 0.6% to 39,576, while Hong Kong’s Hang Seng Index edged 0.3% lower to 23,845, though it remained above its 50-day moving average near 23,330. US equity futures were also under pressure, with both the S&P 500 and Nasdaq 100 E-mini contracts declining 0.5% during Asia trading hours. Bucking the regional trend, Singapore’s Straits Times Index rose 0.3% to notch a fresh all-time intraday high of 4,026.

Conflicting tariff signals from the White House

Confusion surrounding the tariff timeline added to market jitters. Commerce Secretary Lutnick indicated that the higher tariffs would be implemented from 1 August, suggesting room for a deadline extension. However, President Trump stated over the weekend that formal letters announcing tariff hikes would be sent out on Monday and Tuesday, ahead of the 9 July deadline.

US dollar gains; commodity currencies underperform

The US Dollar Index rebounded 0.2% to 97.15 but remained capped by its 20-day moving average near 97.85. In today’s Asian session, the Japanese yen (-0.4%), Australian dollar (-0.6%), and New Zealand dollar (-0.7%) were the weakest performers against the greenback.

Gold and Oil retreat

Gold (XAU/USD) slipped 0.8% intraday to US$3,310, falling below its 50-day moving average at US$3,320. West Texas Intermediate (WTI) crude oil extended last week’s losses, down 0.4% to US$66.85 per barrel, breaching its 200-day moving average at US$69.15. The decline was driven by oversupply concerns after OPEC+ agreed to increase August production by 548,000 barrels per day, well above market expectations of 411,000 barrels.

Chart of the day – GBP/USD at risk of breaking below 20-day moving average

Asia mid-session: Tariff uncertainty weighs on Asia equities; Gold, Oil Slip as US dollar rebounds US_United_States_Government_Flag _1

The GBP/USD has failed to make any significant recoveries since last Wednesday, 7 July, dramatic intraday decline of -150 pips to a 6-day low of 1.3563 on the onset of a possible replacement of UK Chancellor Reeves.

Thereafter, the sterling pound has managed to bounce after a retest at 1.3570 (also the 20-day moving average) against the US dollar, but the hourly RSI momentum indicator has continued to flash out bearish momentum conditions since 4 July (see Fig 2).

These observations suggest a potential minor corrective decline sequence within its medium-term uptrend phase. Watch the 1.3670/3690 key short-term pivotal resistance, and a break below 1.3570 exposes the next intermediate support at 1.3470 (also the 50-day moving average)

On the flip side, a clearance above 1.3690 invalidates the bearish scenario to kickstart another bullish impulsive up move sequence for the next intermediate resistances to come in at 1.3800/3830 and 1.3870.

Source: OANDA

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Pepperstone

Friday was, unsurprisingly, a pretty dull day for financial markets, with Independence Day seeing US desks shut, and little going on elsewhere.

As always, any market moves seen on a public holiday, especially a US one, need to be taken with a huge pinch of salt, given the incredibly thin conditions in which they take place. Conditions which, typically, exacerbate even the smallest of moves, leading to a tendency for some to be blown out of all proportion.

In any case, despite equity futures finding some downside on both sides of the pond, the bull case remains intact, especially on Wall Street. Thursday’s jobs report spoke to the continued resilience of the economy, which in turn should see the pace of earnings growth remain strong, while continued progress towards trade deals, and cooler rhetoric, helps to provide further support. The path of least resistance continues to lead to the upside.

On the subject of trade, probably the most interesting development has been President Trump’s promise to soon send out letters informing countries of the tariffs that they will have to pay, if they are unable to reach a trade deal with the US. Of course, this comes as the ‘Liberation Day’ tariffs are due to go back into effect on Wednesday, as the pause implemented in early-April expires. While the US has agreed just 2 trade deals (UK & Vietnam) in that time, far short of the ’90 deals in 90 days’ that we were promised, I don’t think there’s too much reason to panic.

Not only have the Trump Admin shown, numerous times, that they are unwilling, unable, or both, to stomach super-high tariff levels akin to a trade embargo, even those letters give plenty of wriggle room. Not only are they being sent before the pause expires, but the tariffs in said letters won’t actually come into effect until 1st August. Hence, this has all the hallmarks of another ‘escalate to de-escalate’ strategy, teeing us up nicely for another TACO moment in pretty short order.

Besides that, the weekend’s most interesting development came in the crude space, with OPEC+ agreeing a larger than expected 550k bpd output hike from August. Clearly, the focus here remains on the ‘war for market share’ idea that I’ve been talking about in these notes for some time, with Saudi likely also seeking to punish some producers for non-compliance.

Anyway, from a market perspective all this means one thing – downside for crude benchmarks. The market was already over-supplied, amid a dour demand outlook, now OPEC+ are bringing back more barrels, at the same time as the Trump Admin seek to ramp up the ‘drill baby, drill’ agenda. It’s tough to build a sustainable bull case for crude against that backdrop.

I also find it tough to build a durable bull case for the dollar right now, though for very different reasons. At its core, the greenback remains highly unattractive, with participants focused not on the resiliency of the US economy, nor the FOMC’s relatively more hawkish stance in comparison to G10 peers. Instead, it is the continued erosion of Fed policy independence, and the highly unorthodox style of policymaking in Washington DC, which is giving international investors cause for concern. Capital outflows show no sign of slowing, and with a barren data docket this week, further declines could well be on the cards for the greenback.

I’ve still got 1.20 in the EUR and 1.40 in the GBP pencilled in as medium-term targets. While neither are exactly bastions of political stability right now, both continue to be viewed as safer, and more predictable, options than sitting in the buck – the Swissie fits this bill too, incidentally, though with the SNB lurking, longs here are harder to have conviction in.

LOOK AHEAD – The week ahead docket is pretty sparse (see below), meaning focus will almost certainly fall on what feels like an inevitable deluge of trade- and tariff-related headlines as we move through the week ahead.

As for scheduled events, though, it’s very slim pickings. The RBA will deliver a very well-telegraphed 25bp cut in the early hours of tomorrow morning, with this set to be followed by the RBNZ standing pat on Wednesday. Minutes from the June FOMC meeting are also due, though with July having now become a nothingburger, these probably won’t be worth worrying about.

On the data front, Friday’s monthly UK GDP data is too noisy to be of any use, while the weekly US jobless claims data, and Canadian employment stats, will probably get a cursory glance, and little else.

There is, though, a fairly chunky week of Treasury supply on deck, with 3-, 10- and 30-year sales due. The latter two are likely to be of particular interest, especially with fiscal jitters remaining in light of the ‘One Big Beautiful Bill’ having been signed into law on Friday. Were one, or both, of those sales to be poorly received, fears over the unsustainable trajectory of US debt will be re-ignited once more.

Source: Pepperstone

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Daniel Carter

Economic

Political

Portuguese Finance Minister Joaquim Miranda Sarmento said he sees the European Union and the US reaching an agreement with tariffs potentially below 10% that would help keep trade flowing.

“It's possible to have an agreement with very low tariffs, an agreement that could be perceived as beneficial to both parties and that could continue to allow us to trade and to increase value for our citizens,” Sarmento said in a Bloomberg Television interview in Brussels. “We expect to have an update of what the Commission was able to negotiate with the US administration,” in the EU finance ministers' meetings to be held today and on Tuesday.

Asked how low those tariffs could be, he later told Bloomberg Radio's Stephen Carroll “probably less than 10%, but let's see what's the outcome.”

The EU has until July 9 to clinch a trade arrangement with US President Donald Trump before tariffs on nearly all of the bloc's exports to the US jump to 50%. Trump has imposed tariffs on almost all its trading partners, saying he wanted to bring back domestic manufacturing, needed to pay for a tax-cut extension and stop other countries from taking advantage of the US.

“If the terms of the deal are not favorable for the EU then there is no agreement,” he said. “If an agreement is not possible on Wednesday there will mostly likely be a new deadline. If at the end of the day an agreement” is not possible, Europe should not retaliate on a full scale and should be very selective.”

Sarmento added that Portugal will support Eurogroup President Paschal Donohoe's bid for a second term heading the meetings of euro-area finance ministers. Sarmento also said the government is still evaluating whether to name a new Bank of Portugal governor or reappoint Mario Centeno, as his term heading the central bank ends this month.

Separately, the government will announce the start of the privatization process of state-owned airline TAP SA in the coming weeks, the minister said.

A plan to privatize TAP was delayed earlier this year after parliament toppled the center-right minority government in a confidence vote in March. Portugal held an early election in May that was won by the ruling coalition, which added seats in parliament while still falling short of an absolute majority.

Source: Bloomberg Europe

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Gerik

Commodity

Economic

Fresh Tariff Threat Rattles Metal Markets

President Donald Trump’s unexpected announcement of a sweeping new tariff targeting all countries aligned with the BRICS bloc has reignited volatility in global commodities markets. In a late Sunday post on Truth Social, Trump declared that a 10% tariff would be imposed on BRICS nations Brazil, Russia, India, China, and South Africa with no exceptions and in addition to existing duties. This sudden policy signal has injected new uncertainty into an already fragile global trade environment.

Following the announcement, industrial metals swiftly reversed recent gains. Copper dropped 0.7% to $9,800.50 per ton in Shanghai, marking a third consecutive decline on the London Metal Exchange after previously breaching $10,000. Aluminum also fell 0.8%, and broader declines were recorded across major base metals. Iron ore futures on the Singapore Exchange slipped 0.5% to $95.30 per ton, underscoring the widespread nature of the risk-off sentiment.

Market Sensitivity to Trade Policy Surprises

The reaction in commodity prices underscores a clear causal link between unexpected shifts in US trade rhetoric and investor sentiment across raw material markets. While industrial metals had shown resilience in recent months thanks to rising US imports, shrinking global inventories, and a weaker dollar the renewed threat of protectionism directly undermines the demand outlook.

Trump’s tariff policy threatens to disrupt trade flows with some of the world’s largest metal-producing and consuming economies. China, the world’s largest consumer of copper and aluminum, sits at the core of this risk, with Brazil and South Africa also being key resource exporters. A blanket tariff on BRICS nations, if implemented without exceptions, would not only raise transaction costs but also introduce fresh supply chain disruptions for global manufacturers.

Timing of the Policy Escalation Heightens Market Risks

The announcement comes as Trump prepares to escalate pressure on trade partners more broadly. Treasury Secretary Scott Bessent confirmed that as many as 15 countries will receive formal tariff warning letters, with new rates scheduled to take effect on August 1. While Bessent suggested there may be room for bilateral negotiation beyond the July 9 deadline, the lack of clarity has left investors and producers bracing for broader disruption.

The timing is particularly sensitive as metals markets had only recently shown signs of stabilization. Copper’s rise above $10,000 last week was fueled by surging US-bound shipments and declining stockpiles, suggesting recovering demand in the West. Trump’s tariff threat now casts doubt on that trajectory by introducing the potential for retaliatory measures and supply chain rerouting.

Risk of Retaliation and Strategic Recalibration

The BRICS bloc, while economically diverse, shares an interest in countering US trade dominance. A coordinated response to Trump’s policy could include counter-tariffs or reallocation of commodity flows toward non-Western markets. Such realignment would likely take time but would introduce structural inefficiencies and cost burdens across logistics and procurement systems. In this context, the metals market’s initial reaction reflects not only short-term pricing risk but a longer-term strategic recalibration.

Trump’s unilateral tariff threat toward BRICS nations has exposed underlying fragilities in the industrial metals market. While recent gains were supported by positive fundamentals, the sudden shift in trade policy sentiment highlights the vulnerability of globally integrated supply chains. As the August 1 tariff deadline approaches, markets will remain sensitive to any further developments or clarifications, with the potential for a deeper correction if retaliatory measures emerge or if trade flows become more restricted. The episode reinforces the market’s ongoing dependency on geopolitical stability for price momentum and supply continuity.

Source: Bloomberg

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IC Markets

DXY (US Dollar Index)

Potential Direction: Bullish

Overall momentum of the chart: Bearish

The price could potentially make a bullish continuation toward the 1st resistance.

Pivot: 96.66

Supporting reasons: Identified as a pullback support that aligns with the 161.8% Fibonacci extension, indicating a potential area where buying interest could pick up to resume the uptrend.

1st support: 95.40

Supporting reasons: Identified as a support that aligns with the 161.8% Fibonacci extension, indicating a potential area where the price could stabilize once again.

1st resistance: 97.79Supporting reasons: Identified as a pullback resistance, indicating a potential level that could cap further upward movement.

Monday 7th July 2025: Technical Outlook and Review_1

EUR/USD

Potential Direction: Bullish

Overall momentum of the chart: Bullish

The price could fall toward the pivot and potentially make a bullish rise toward the 1st resistance. Additionally, the price is above the Ichimoku Cloud, which adds further significance to the strength of the bullish momentum.

Pivot: 1.1630

Supporting reasons: Identified as a pullback support, indicating a potential area where buying interest could pick up to resume the uptrend.

1st support: 1.1446Supporting reasons: Identified as an overlap support, indicating a potential area where the price could again stabilize.

1st resistance: 1.1909

Supporting reasons: Identified as an overlap resistance that aligns with the 161.8% Fibonacci extension and the 78.6% Fibonacci projection, indicating a potential area that could halt any further upward movement.

Monday 7th July 2025: Technical Outlook and Review_2

EUR/JPY

Potential Direction: Bullish

Overall momentum of the chart: Bullish

Pivot: `169.69

Supporting reasons: Identified as a pullback support, indicating a potential area where buying interest could pick up to resume the uptrend.

1st support: 167.43Supporting reasons: Identified as a pullback support, indicating a potential area where the price could again stabilize.

1st resistance: 171.98Supporting reasons: Identified as a multi-swing-high resistance and acting as a key area that could halt any further upward movement.

Monday 7th July 2025: Technical Outlook and Review_3

EUR/GBP

Potential Direction: BullishOverall momentum of the chart: Bullish

The price is falling toward the pivot and could potentially make a bullish rise toward the 1st resistance. Additionally, the price is above the Ichimoku Cloud, which adds further significance to the strength of the bullish momentum.

Pivot: 0.8563

Supporting reasons: Identified as a pullback support, indicating a potential area where buying interest could pick up to resume the uptrend.

1st support: 0.8521Supporting reasons: Identified as a pullback support, indicating a potential area where the price could stabilize once more.

1st resistance: 0.8681Supporting reasons: Identified as a swing high resistance, indicating a potential level that could cap further upward movement.

Monday 7th July 2025: Technical Outlook and Review_4

GBP/USD

Potential Direction: Bullish

Overall momentum of the chart: Bullish

Pivot: 1.3563

Supporting reasons: Identified as a pullback support that aligns closely with the 50% Fibonacci retracement, indicating a potential area where buying interest could pick up to resume the uptrend.

1st support: 1.3376Supporting reasons: Identified as an overlap support, indicating a potential area where the price could stabilize once more.

1st resistance: 1.3790Supporting reasons: Identified as a swing high resistance that aligns with a 161.8% Fibonacci extension, indicating a potential level that could cap further upward movement.

Monday 7th July 2025: Technical Outlook and Review_5

GBP/JPY

Potential Direction: BullishOverall momentum of the chart: Bullish

Pivot: 195.17

Supporting reasons: Identified as a pullback support, indicating a potential area where buying interest could pick up to resume the uptrend.

1st support: 193.09

Supporting reasons: Identified as a pullback support, indicating a potential level where the price could stabilize once more.

1st resistance: 198.44Supporting reasons: Identified as a multi-swing high resistance, acting as a key area that could halt any further upward movement.

Monday 7th July 2025: Technical Outlook and Review_6

USD/CHF

Potential Direction: Bearish

Overall momentum of the chart: Bearish

The price is rising toward the pivot and could potentially make a bearish reversal and fall toward the 1st support. Additionally, the price is below the Ichimoku Cloud, which adds further significance to the strength of the bearish momentum.

Pivot: 0.8042

Supporting reasons: Identified as a pullback resistance that aligns with the 50% Fibonacci retracement, indicating a potential area where selling pressures could intensify.

1st support: 0.7872Supporting reasons: Identified as a swing low support, indicating a potential level where the price could stabilize once again.

1st resistance: 0.8159Supporting reasons: Identified as a pullback resistance, indicating a potential level that could cap further upward movement.

Monday 7th July 2025: Technical Outlook and Review_7

USD/JPY

Potential Direction: Bullish

Overall momentum of the chart: Bearish

The price could fall toward the pivot and potentially make a bullish rise toward the 1st resistance.

Pivot: 142.38

Supporting reasons: Identified as a multi-swing low support, indicating a potential area where buying interest could pick up to resume the uptrend.

1st support: 139.90Supporting reasons: Identified as a swing low support, suggesting a potential area where the price could stabilize once more.

1st resistance: 146.02Supporting reasons: Identified as a pullback resistance that aligns closely with the 61.8% Fibonacci retracement, indicating a potential level that could cap further upward movement.

Monday 7th July 2025: Technical Outlook and Review_8

USD/CAD

Potential Direction: Bullish

Overall momentum of the chart: Bearish

The price has made a bullish reversal off the pivot and could potentially rise toward the 1st resistance.

Pivot: 1.3570

Supporting reasons: Identified as a swing-low support, indicating a potential area where buying interests could pick up to stage a rebound.

1st support: 1.3435

Supporting reasons: Identified as a multi-swing-low support, indicating a key level where the price could stabilize once more.

1st resistance: 1.3732

Supporting reasons: Identified as a swing-high resistance that aligns closely with a 50% Fibonacci retracement, indicating a potential area that could halt any further upward movement. The presence of the red Ichimoku Cloud adds further significance to the strength of the downward momentum.

Monday 7th July 2025: Technical Outlook and Review_9

Source: IC Markets

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FOREX.com

Key Events to Watch

● Chinese CPI – Wednesday: Will deflationary pressures deepen?

● FOMC Minutes & USD Weakness: Possible policy clues and implications for oil demand

● U.S. Crude Inventories: Retesting 3-month highs, adding pressure to prices

As WTI trades back inside the 3-year downtrend channel established since the 2022 highs, the outlook has shifted to a neutral-to-bearish tone, with markets awaiting a decisive breakout.

Several macro and supply-side factors are reinforcing this stance, including OPEC’s planned unwind of voluntary supply cuts totaling more than 400,000 barrels per day starting in August, rising U.S. crude inventories nearing 3-month highs, and ongoing trade uncertainty tied to near-term tariff decisions.

Crude Oil Weekly Outlook: OPEC Meeting vs WTI Price Risks_1

Despite current downside pressure, several bullish factors are helping to hold prices and are worth monitoring:

● Continued U.S. dollar weakness could lend support to commodity prices.

● OPEC’s confidence in phasing out cuts suggests a more optimistic supply-demand outlook.

● Expectations for interest rate cuts and potential trade agreements may boost demand sentiment.

So what are the key levels I’m watching?

Crude Oil Weekly Outlook: Weekly Time Frame – Log Scale

Crude Oil Weekly Outlook: OPEC Meeting vs WTI Price Risks_2

As oil holds back within the 3-year down trending channel, a bearish-to-neutral stance persists in line with OPEC’s supply strategies. The latest oil drop found support above the 64-mark, aligning with the neckline of a previously formed inverted head and shoulders pattern that corresponded with the breakout above 70 during Middle East escalations. Now that we are back at that support and technical checkpoint, the scenarios are as follows:

Bearish Scenario:Should oil close below the 63.40 level, downside risks may accelerate toward the midzone of the established 3-year channel, aligning with the 60, 58, and 56 levels, respectively, before confirming projections for new 2025 lows.

Bullish Scenario: On the upside, if crude holds above the 64–66 support zone, it may recover toward the 69 and 72 resistance levels, where it is likely to challenge a fresh breakout attempt. Such a move could reshape the broader WTI outlook, either sustaining or overcoming the dominance of the long-standing down trending channel.

Source: FOREX

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Gerik

Economic

Commodity

Export Controls as Strategic Leverage in Geopolitics

China’s decision in April to curb rare earth and magnet exports, primarily in retaliation to US-imposed tariffs, served its geopolitical intent by stalling parts of the global auto supply chain and drawing US officials back into negotiations. With China supplying 90% of the world’s rare earth magnets, the move underscored its dominance in a critical material segment used across electric vehicles, defense technologies, and clean energy systems.

The export restrictions prompted a 75% drop in magnet exports within two months and forced several automakers globally to suspend production. These disruptions illustrated a direct causal relationship between Beijing’s policy intervention and the functional slowdown of the international manufacturing network. The United States subsequently reached a tentative deal with China on June 27 to resume rare earth trade, but industry insiders expect a slow implementation phase, as outlined by Baotou Rare Earth Products Exchange.

Economic Repercussions for Domestic Producers

While the move demonstrated China’s external bargaining power, the domestic cost has been severe. Magnet producers, already strained by a sluggish Chinese economy and weakening demand from the electric vehicle sector, found themselves facing an internal crisis. Export volumes had been crucial to many firms, contributing between 18% and 50% of total revenue among the top eleven listed magnet producers in 2024.

The abrupt contraction in export markets, combined with tepid domestic demand, has placed pressure on both revenue and operational continuity. Several medium-sized firms cut production by approximately 15% during April and May, while inventories began to accumulate due to the customized nature of magnets, which hinders domestic resale.

This squeeze has created a dual burden for manufacturers: they must manage rising storage and compliance costs, while simultaneously grappling with reduced revenue streams. The correlation here reveals that while the export curbs were politically intentional, their economic impact at home has been disproportionately negative and difficult to contain.

Market Signals Diverge from Business Realities

Stock prices of magnet-producing firms initially fell sharply in April following the export announcement but have since staged an unexpected rebound. Analysts such as Cory Combs at Trivium China warn that this recovery may be driven more by speculative sentiment than by any structural improvement in the sector’s prospects. Given the absence of a clear timeline for export license normalization, and the uncertain path forward in US-China trade relations, the current market optimism appears decoupled from operational fundamentals.

Moreover, the presence of numerous private firms in the rare earth magnet industry obscures a full accounting of the sector’s financial condition. Share prices of listed entities only partially reflect broader industry stress, especially among small-to-mid-size producers that lack export licenses or political influence.

Historical Parallels Suggest Prolonged Recovery Timelines

The experience with other critical minerals namely germanium and antimony suggests that even when controls are aimed at civilian industries, recovery in export flows is not guaranteed. Customs data show that antimony shipments to Europe remain far below pre-control levels, even a year after restrictions were imposed. This precedent indicates a possible lag effect, where producers may continue facing delays and compliance hurdles long after diplomatic agreements are reached.

Industry observers like Ellie Saklatvala from Argus emphasize that the burdens associated with documentation and licensing for exports have become a permanent feature of the trade process. These institutional changes reflect a structural shift in China’s export policy, with long-term implications for efficiency, trade friction, and inventory management.

Pressure May Drive Consolidation, Not Reform

The mounting operational strain could trigger a wave of industry consolidation. In a sector with hundreds of producers, particularly in regions like Inner Mongolia, financial pressure and logistical bottlenecks may force smaller players to exit or merge. Analysts like David Abraham view this as a potential outcome that Beijing may tacitly support, as it allows for tighter control and better tracking of rare earth flows.

This dynamic introduces a complex causal relationship: export controls designed for external strategic leverage inadvertently become tools for domestic industry restructuring. While short-term business losses are severe, the central government may view long-term consolidation as a policy-aligned benefit.

Strategic Gains at the Expense of Industrial Stability

China’s rare earth export curbs have yielded political leverage but at a significant cost to its own magnet manufacturing base. The dual effects geopolitical positioning and economic self-harm reveal the trade-offs embedded in strategic resource nationalism. Even as negotiations with the US offer a potential easing of restrictions, the regulatory and logistical friction introduced by the controls appears here to stay.

The episode underscores a broader transformation in how China uses its mineral dominance not merely as a passive supplier but as an active regulator of global supply chains, capable of enforcing compliance externally while reshaping industry structures at home. Whether this strategy will ultimately strengthen China’s position or undermine its industrial foundation remains contingent on how quickly and effectively domestic firms can adapt.