Crude oil benchmarks moved higher on Thursday as global markets responded positively to signs of de-escalation in trade tensions between the United States and its key partners. Brent crude rose by 24 cents to reach $68.75 per barrel, while West Texas Intermediate (WTI) climbed 25 cents to $65.50. The gains reflect improved investor sentiment following trade agreements involving the US, Japan, and potentially the European Union, signaling a reduced risk to global economic growth and energy demand.

This rebound comes on the heels of the US-Japan deal, which eliminated planned tariffs on Japanese goods, particularly auto imports, in exchange for a $550 billion commitment in US-bound investment and loans. In parallel, US-EU trade discussions are progressing, with European diplomats confirming movement toward a deal that may feature a 15% baseline tariff on EU goods along with selective exemptions. These diplomatic breakthroughs have fueled investor confidence, supporting energy prices as traders bet on increased economic activity and stable trade flows.

While these developments are not direct causes of higher oil consumption, the correlation between trade normalization and anticipated growth in energy demand creates a supportive environment for crude pricing. As such, the upward movement in oil reflects expectations rather than immediate shifts in physical supply or demand.

Additional momentum came from the supply side. The US Energy Information Administration reported that crude stockpiles declined by 3.2 million barrels last week, falling to 419 million barrels. This figure more than doubled analysts’ expectations of a 1.6 million-barrel draw. The larger-than-expected reduction suggests tightening supply conditions in the US, a key global producer, which typically acts as a bullish signal for markets.

The drawdown may have been influenced by increased refinery activity, stronger domestic demand, or logistical bottlenecks that temporarily disrupted import levels. Regardless of the underlying drivers, this inventory contraction adds a fundamental basis for the recent price recovery, reinforcing the notion of a more balanced or tightening oil market.

Despite the bullish catalysts, geopolitical instability continues to constrain oil’s upward trajectory. Russia and Ukraine resumed peace negotiations in Istanbul, yet no significant breakthrough was reached. Discussions on further prisoner exchanges were held, but major divides remain on a formal ceasefire and leadership summit. These uncertainties keep risk premiums in the market elevated, especially given energy supply vulnerabilities in Eastern Europe.

Moreover, oil exports through Russia’s Black Sea ports were temporarily disrupted by new shipping regulations. This halted shipments from Kazakhstan via a pipeline consortium partially owned by major US firms, raising concerns over regional supply consistency. Compounding the issue, the US is considering sanctions on Russian oil to intensify pressure on Moscow, while the EU approved its 18th sanctions package, which included lowering the price cap on Russian crude exports.

These political and regulatory variables do not yet constitute a structural supply shock but inject volatility into the market. The resulting uncertainty limits bullish momentum, even as fundamentals and sentiment appear constructive.

Oil prices are benefiting from a combination of easing trade tensions and unexpectedly sharp inventory drawdowns in the United States. These twin factors have lifted market sentiment and signaled possible strengthening in demand amid tighter supply conditions. However, geopolitical developments particularly surrounding Russia and Ukraine remain unresolved, restricting the pace and scope of further price increases. Analysts, including Hiroyuki Kikukawa, expect WTI to remain within a $60–$70 trading band for now, with short-term direction likely shaped by diplomatic progress, supply data, and geopolitical escalations.

1. Japan's July manufacturing activity contracts.

2. White House says Japan to increase U.S. rice imports by 75%​ immediately.

3. Russia-Ukraine third round of direct talks concludes; both agree to new prisoner swap.

4. Russia's Black Sea oil exports halted due to changes in port entry rules.

5. The EU and the U.S. are said to be moving toward a Trade Deal with 15% Tariffs on most goods.

6. Bond Traders increase bets on Fed rate cuts in 2026 after Powell criticism by Trump.

7. Hamas says it responded positively to the temporary ceasefire deal proposal with Israel.

8. Iranian Deputy FM: Iran will respond if 'EU3' decides to restore sanctions.

A private sector survey released on Thursday showed that Japan's manufacturing activity contracted in July, weighed down by uncertainty over U.S. tariffs. The preliminary Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) for Japan fell to 48.8 in July from 50.1 in June, marking the first time the index has dipped below the 50.0 threshold that separates expansion from contraction in 13 months. Meanwhile, Japan's services sector continued to outperform manufacturing, with activity growth accelerating to a five-month high, driven by strong demand. The survey revealed that key sub-indices, such as output and new orders, declined at their fastest paces in four and three months, respectively, as businesses assessed the impact of U.S. tariffs. Uncertainty over future trade policies dampened expectations for the coming year.

On July 23rd, the White House stated that the U.S.-Japan investment agreement will focus on semiconductor design and manufacturing, natural gas, and new shipyards. Japan will immediately increase its imports of U.S. rice by 75% and significantly expand its import quotas. Japan will purchase $8 billion worth of U.S. goods, including corn, soybeans, fertilizers, bioethanol, and sustainable aviation fuel. The White House noted that the U.S. and Japan are discussing a new long−term purchase agreement for liquefied natural gas from Alaska. Additionally, Japan has committed to buying U.S.−made commercial aircraft, including a deal to purchase 100 Boeing planes. On Monday, Trump posted on social media that the U.S. and Japan had reached a trade agreement, reducing the originally planned 25% tariff to 15%, while Japan would invest $550 billion in the U.S. and open its agricultural markets, including rice.

On July 23rd, Russian presidential aide Dmitry Peskov stated after the conclusion of the third round of direct Russia-Ukraine talks that the two sides are currently exchanging 250 prisoners each, the final batch agreed upon in the second round of negotiations. Russia has returned over 7,000 bodies to Ukraine, and if Ukraine has sufficient refrigeration equipment, Russia is prepared to return an additional 3,000 Ukrainian soldiers' remains. Russia reiterated its proposal for a 24-48-hour ceasefire along the contact line to allow both sides to recover bodies and evacuate the wounded. The two sides agreed to conduct another prisoner swap involving over 1,200 people in the near future. Additionally, Russia suggested establishing three working groups on political, humanitarian, and military issues, with Ukraine pledging to consider the proposal. Peskov noted that the two sides spent considerable time discussing the memorandum from the previous exchange, but their positions remained far apart. However, they agreed to continue discussions at the delegation and working group levels. Peskov emphasized that a leaders' meeting could only be held after thorough discussions on the agreement, saying a leaders' meeting is meant to finalize an agreement, not to negotiate details now.

Reports indicate that oil loading at two major Russian Black Sea terminals has been suspended, reportedly due to paperwork related to new port entry safety regulations. Two industry insiders said the halt affects exports from the Port of Novorossiysk and the Yuzhnaya Ozereevka terminal, operated by the Caspian Pipeline Consortium. One of them noted that he expects the situation to be resolved within a day or two. The changes in entry rules for Russian seaports come after a series of mysterious tanker explosions in recent months. Earlier this week, Russian President Vladimir Putin signed a decree requiring ships arriving from foreign ports to obtain permission from the port captain and approval from Russia's Federal Security Service (FSB).

According to diplomats familiar with the negotiations, the European Union and the United States are moving toward an agreement that would set a 15% tariff rate on most goods. Diplomats said member states may be prepared to accept the 15% tariff, with EU officials pushing to apply this rate to sectors such as automobiles. One diplomat added that steel and aluminum imports exceeding certain quotas would face a 50% tariff. While EU officials expressed optimism about reaching a deal, they cautioned that any final agreement would require approval from U.S. President Donald Trump, whose final decision remains unpredictable.

Bond traders are ramping up bets that the Federal Reserve will cut interest rates more aggressively next year, as market speculation grows that a leadership change at the Fed could lead to the looser monetary policy demanded by U.S. President Donald Trump. This confidence is reflected in the yield spread between SOFR futures expiring in December 2025 and December 2026, which indicates market expectations for Fed rate cuts over that period. Although the spread has been gradually widening in recent months due to economic resilience, leading traders have anticipated delayed rate cuts. However, Trump's sharp criticism of Fed Chair Jerome Powell has accelerated this trend. Investors now expect 76 basis points of rate cuts next year, compared to just 25 basis points in April.

In the early hours of Tuesday, the Palestinian Islamic Resistance Movement (Hamas) issued a statement saying it had submitted its response to the ceasefire proposal for Gaza to the mediators. In a brief statement, Hamas said the response included its position and that of other Palestinian factions regarding the proposal. No further details were provided. Indirect negotiations between Israel and Hamas on a Gaza ceasefire and the exchange of hostages have been ongoing in Doha since July 6th. Media reports revealed that mediators Qatar, Egypt, and the U.S. submitted an updated ceasefire proposal to both sides on July 16th.

Kazem Gharibabadi, Iran's deputy foreign minister for international affairs, said Iran considers the upcoming meeting of the "EU3" (Britain, France, and Germany) important but emphasized that European countries should not coordinate their positions with the U.S.

On July 21st, Iranian Foreign Ministry spokesman Esmaeil Baghaei announced that Iran and the EU3 would hold deputy foreign minister-level talks in Istanbul on July 25th to discuss the Iranian nuclear issue. Gharibabadi told reporters at a press conference that Friday's talks are important. Iran has always valued meetings with European countries, but an important issue has arisen. They have consistently told them that European countries should have an independent policy. They should not coordinate their positions with the U.S. Gharibabadi told the media that if the EU3 decides to restore sanctions on Iran, Tehran will respond.

Gharibabadi told the media that if the EU3 decides to restore sanctions on Iran, Tehran will respond. "The snapback (the UN Security Council's mechanism for reimposing sanctions on Iran) process has no real legal standing." Gharibabadi explained that Iran will not remain silent but respond and take action if the snapback is activated. At the same time, Gharibabadi did not rule out the possibility of Iran withdrawing from the Treaty on the Non-Proliferation of Nuclear Weapons (NPT) if sanctions are reinstated, noting that countermeasures are still under consideration.

Utc+8 11:05 RBA Governor Bullock Speaks

Utc+8 15:15 France July Manufacturing PMI Flash

Utc+8 15:30 Germany July Manufacturing PMI Flash

Utc+8 16:00 Eurozone July Manufacturing PMI Flash

Utc+8 16:30 UK July Manufacturing PMI Flash

Utc+8 20:15 ECB July Interest Rate Decision

Utc+8 20:30 Canada May Retail Sales MoM

Utc+8 20:45 ECB President Lagarde Holds Monetary Policy Press Conference

Utc+8 21:45 US July S&P Global Manufacturing PMI Flash

Utc+8 22:00 US June New Home Sales (Annualized)

Currency markets responded positively on Thursday to encouraging developments in global trade talks, particularly between the United States, Japan, and the European Union. The euro approached its highest level in nearly four years, trading at $1.1768, just shy of the $1.1830 peak recorded earlier in July. This appreciation is closely associated with reports from European diplomats that Washington and Brussels are progressing toward a trade agreement that may include a 15% baseline US tariff but with possible exemptions. Such developments have led to renewed optimism that the transatlantic trade standoff could be avoided, easing investor anxieties.

This rise in the euro’s value appears to correlate with a broader improvement in risk sentiment rather than a direct causal link to the trade deal alone. However, the timing and alignment with recent diplomacy indicate a reinforcing effect, especially as fears of a retaliatory trade spiral between the EU and US appear to be receding. Carol Kong of the Commonwealth Bank of Australia emphasized that the market had previously priced in potential retaliation risks, and their dissipation has released upward pressure on the euro.

The Japanese yen also gained traction, with the US dollar falling to 146.38 yen, marking its fourth consecutive session of decline against the Japanese currency. While part of the yen’s strength stems from the US-Japan trade deal where Tokyo secured relief from new tariffs in exchange for a $550 billion investment and loan package the overall gains were limited due to unresolved political uncertainty in Japan. Prime Minister Shigeru Ishiba’s denial of resignation rumors, following reports of his intention to step down after an election defeat, has left markets cautious about Japan’s fiscal direction and potential implications for Bank of Japan policy.

The yen’s appreciation, therefore, can be seen as a result of global market relief and favorable trade outcomes, partially offset by domestic governance volatility. Investors remain uncertain about whether the current policy framework will hold, thereby capping further appreciation of the yen in the immediate term.

The broader shift in sentiment has also lifted risk-sensitive currencies. The Australian dollar climbed to $0.6604, its highest in eight months, as investors moved out of the safe-haven US dollar and embraced higher-yielding assets. Similarly, the British pound remained firm at $1.3582 following a moderate gain, and the New Zealand dollar remained stable near $0.6046. The US dollar index, a measure of the dollar against a basket of major currencies, was flat at 97.21, suggesting broad-based weakening of the greenback as global trade risks diminish.

Amid the currency movements driven by trade optimism, investor focus has also shifted to the European Central Bank’s upcoming rate decision. While no change in interest rates is expected, markets are particularly attuned to forward guidance. Speculation continues that the ECB may deliver another rate cut before the end of the year, with December viewed as the most probable window. Any dovish signals from the ECB could temper euro gains, highlighting how trade progress and central bank policy continue to jointly shape forex trends.

The recent appreciation of the euro and yen reflects a convergence of trade optimism and improved investor sentiment, signaling a broader risk-on environment in global markets. However, structural uncertainty in Japan and anticipated policy decisions in Europe present limiting factors to further currency strength. As tariff concerns temporarily subside, the next phase of market dynamics will likely be shaped by domestic political developments and monetary policy recalibrations.

A crucial round of trade negotiations between the United States and South Korea, intended to address the impact of newly announced US tariffs, has been postponed due to scheduling issues on the part of US Treasury Secretary Scott Bessent, according to South Korea’s Ministry of Economy and Finance. The meeting, which was to be held in Washington, was meant to include both finance and trade officials from both governments, including South Korean Finance Minister Koo Yun-cheol and Trade Minister Yeo Han-koo. Koo had planned to depart for the US on Thursday for the Friday session, hoping to secure exemptions from the impending 25% tariffs set to be enforced from August 1.

While the cancellation was officially attributed to a scheduling conflict, the timing has added pressure to South Korea’s diplomatic position. The delay occurs just days after Japan successfully finalized a deal with the US. That agreement was promoted by President Trump as a significant win, granting US products particularly in the automotive and agricultural sectors enhanced market access in Japan. This development has created a precedent and potentially raised the negotiation bar for Seoul, which now faces not only the economic threat of tariffs but also increased comparative pressure following Japan’s swift concessions.

Although the top-level meeting was scrapped, South Korean trade envoy Yeo Han-koo and Industry Minister Kim Jung-kwan remain in Washington and have proceeded with scheduled meetings with their US counterparts. These interactions may lay the groundwork for a broader compromise once the postponed leadership meeting is rescheduled. The South Korean government has emphasized its willingness to resume high-level talks as soon as possible, indicating that the diplomatic channels remain active.

The South Korean finance ministry also reiterated that the initial invitation for the talks came from the US side, underscoring that Seoul is acting in response to Washington’s overtures, not as an instigator. This framing may be a strategic attempt to shift the narrative from defensive negotiations to one of cooperative dialogue, especially given the domestic implications of the upcoming tariffs.

With the August 1 deadline fast approaching, the cancellation of high-level trade talks has introduced greater uncertainty for South Korean industries vulnerable to American import restrictions. The juxtaposition with Japan’s recently concluded deal adds both competitive and diplomatic pressure on Seoul to accelerate negotiations. Although mid-level discussions remain underway, the lack of a clear path to a top-level resolution leaves the future of the US-South Korea trade relationship in a state of flux. Time constraints and geopolitical dynamics may ultimately determine whether Seoul can secure relief or brace for economic fallout.

Japan's manufacturing performance fell back into contraction territory in July, with the S&P Global Japan Manufacturing Purchasing Managers’ Index (PMI) declining to 48.8 from June’s 50.1. This reversal marks a significant shift, as June had been the first time in over a year that the index crossed above the neutral 50.0 threshold. The sharp drop in the PMI reflects a decrease in both output and new orders, which recorded their fastest decline in four and three months, respectively. These trends suggest that businesses are reevaluating their production strategies in response to recent developments in international trade policy.

The decline appears correlated with the announcement by US President Donald Trump of a new bilateral trade agreement with Japan. The deal includes a planned $550 billion Japanese investment in the United States and imposes a 15% tariff on Japanese imports. This policy change has created a cautious business climate, with S&P Global’s Annabel Fiddes noting a reduction in year-ahead expectations, highlighting that the current drop in activity may be a response to the perceived risk of worsening trade conditions. While the contraction could be partly coincidental with tariff announcements, the magnitude and timing suggest a plausible causal relationship, especially considering the targeted nature of the US policy shift toward Japanese goods.

In contrast to the weakening manufacturing activity, Japan’s services sector demonstrated robust momentum. The S&P Global Japan Services PMI rose to 53.5 in July, up from 51.7 in June. This uptick was largely propelled by domestic business growth, underlining the sector’s growing importance in sustaining overall economic activity amid external headwinds. Although new export orders within services declined for the first time in seven months and employment growth eased to a near two-year low, the overall service sector continued to grow. This divergence between external-facing and domestic-facing segments reflects how the Japanese economy is currently more shielded by internal consumption than by global trade flows.

The resilience in services also appears to be partially offsetting the broader economic pressure caused by weak manufacturing. When combined, the S&P Global Composite PMI for Japan remained steady at 51.5 in July, unchanged from June. This stasis in the composite index suggests that while manufacturing weakness is a drag, the service sector's strength is keeping the broader economy just above stagnation.

The latest PMI figures paint a picture of an uneven recovery within Japan’s economy. The manufacturing sector is showing signs of vulnerability to shifts in external trade policy, particularly in relation to US tariffs, which seem to be influencing corporate sentiment and activity. In contrast, the services sector is enjoying a modest expansion, bolstered by internal demand and relatively lower sensitivity to international pressures. This divergence indicates that Japan’s near-term growth prospects will likely depend on the interplay between domestic consumption resilience and the global trade environment’s volatility. The outlook remains cautiously positive but contingent on resolving uncertainties surrounding foreign policy and trade.

The bullish mood extended to US and Australian equity futures, with traders maintaining a risk-on stance and eyeing higher targets. Below we break down the technical landscape for the S&P 500, Nasdaq 100, Dow Jones, and ASX 200 futures — along with today’s key economic events.

Wall Street indices reached record highs by Wednesday’s close on trade deal optimism. Trump’s announcement of a trade deal with Japan via Truth Social during Asian trade had sent the Nikkei 225 futures above 41k and within striking distance of its 2024 high. This then sparked expectations of a trade deal with the EU, with some reports suggesting 15% tariffs on most exports from the block.

Wall Street indices continued higher, with the Dow Jones leading the way with a 1.1% gain and a close above 45,000. S&P 500 futures rose 0.8% to a new record high, while the Nasdaq 100 lagged behind.

The S&P 500 continues to use the 10-day EMA as support, and bullish momentum has strengthened at the highs, reflecting strong demand for US equities. While the daily RSI (2) and RSI (14) are both overbought, there are no bearish divergences warning of a pullback.Until price action says otherwise, bulls are assumed to be in control and likely to retain a 'buy-the-dip' mentality. Note the gap target — projected from the April low to the runaway gap — sits around 6,638.

The Nasdaq 100 is also using the 10-day EMA as dynamic support, but it remains the clear laggard of the Wall Street indices. Its daily high failed to surpass last week's high, leaving a potential double top pattern on the daily chart. The daily RSI (2) has also dipped from overbought levels, showing a bearish divergence and signalling a loss of bullish momentum.However, the bigger picture still assumes further upside, with its own runaway gap projecting an upside target around 23,365.

Dow Jones futures delivered a strong bullish breakout from recent consolidation. As the strongest performer of the day, it also shows the cleanest price action and potential to close some of the performance gap with the S&P 500. A move to 46,000 and a potential retest of its all-time high at 76,326 could now be on the cards.

I outlined my bullish bias for the ASX 200 and AUD/JPY in yesterday’s report, and both have turned higher amid the risk-on sentiment. The ASX 200 futures chart has formed a 3-day bullish reversal pattern known as a dark cloud cover. The fact it appeared at support (which previously acted as firm resistance) suggests we may have seen an important swing low on the daily chart.

A decent bullish trend has also emerged on the ASX 200 intraday chart. Bullish momentum overnight saw an upside break of a retracement line, and it looks like bulls could target Friday’s cash-session VPOC (volume point of control) at 8737.I suspect we may see a bit of a shakeout or potential retracement around Friday’s high (8751), though like Wall Street traders, bulls seem more likely to view dips as opportunistic.