President Trump’s statement aboard Air Force One that India could be subjected to tariffs of “20% to 25%” marks a decisive turn in trade negotiations between Washington and New Delhi. While the comment was qualified by an acknowledgment that “nothing is final yet,” the tone reflects rising frustration from the U.S. side regarding India’s limited market openness especially compared to concessions offered by other countries such as Indonesia and the Philippines.

The direct implication is that without further liberalization from India particularly in politically sensitive sectors such as agriculture and dairy the Trump administration is likely to impose punitive tariffs when the current grace period ends on August 1. This signals a return to a more transactional and retaliatory trade stance, with India emerging as the latest target.

Indian officials have tried to navigate a difficult balancing act, offering concessions such as zero tariffs on pharmaceuticals and auto parts while resisting U.S. demands to open its agricultural and automobile sectors. New Delhi has made clear that genetically modified crops and broader dairy liberalization are off-limits due to domestic political sensitivities. The Modi government faces pressure from powerful farmer constituencies ahead of key state elections, limiting its room for compromise.

This domestic political constraint creates a causal roadblock in negotiations: even though New Delhi seeks to avoid higher tariffs, it cannot cross certain policy red lines. As a result, the possibility of a tariff deal before the deadline is increasingly uncertain, especially with time running out.

Further complicating talks is the broader geopolitical context. Trump’s claims that his pressure campaign led to a ceasefire between India and Pakistan in April have already irritated New Delhi. Additionally, India is under scrutiny for its continued imports of Russian oil. Trump has warned of “secondary tariffs” on countries including India and China that defy U.S. sanctions tied to the Ukraine war.

Thus, India is facing dual pressure: one from the bilateral trade deal and another from its alignment in broader U.S. foreign policy goals. This intersection of economic and geopolitical interests weakens the negotiating leverage of the Modi administration and increases the likelihood of U.S. follow-through on tariff threats.

Despite a signed terms-of-reference document for a bilateral agreement and ongoing discussions, no concrete progress has been made public. According to U.S. Trade Representative Jamieson Greer, more time is needed to assess India’s willingness to open its markets. With less than 48 hours before Trump’s tariff deadline, the likelihood of a substantive breakthrough appears minimal.

Trump’s tariff warning to India highlights the persistent structural disconnect between U.S. trade demands and India’s domestic policy constraints. The causal relationship is evident: New Delhi’s refusal to liberalize sensitive sectors invites retaliatory tariffs, which in turn threaten India’s export competitiveness and bilateral ties. With both sides entrenched and geopolitical overhangs worsening, the risk of tariffs being imposed after the August 1 deadline appears elevated. Markets should prepare for heightened volatility in trade-sensitive sectors especially pharmaceuticals, automotive components, and agriculture as India navigates this diplomatic tightrope.

The euro hovered around $1.1558 in early Wednesday trading, recovering slightly from Tuesday’s one-month low of $1.15185. This week’s decline triggered by a trade agreement seen as disproportionately favorable to the U.S. marks the euro’s first monthly drop in 2025 despite an 11.7% gain year-to-date.

The EU–U.S. deal, while temporarily easing trade war fears, left many investors unsettled due to its lopsided nature and vague terms. As Saxo’s Charu Chanana noted, markets now interpret such trade agreements as “symbolic and tactical” rather than structurally transformative, especially in the absence of detailed enforcement mechanisms.

This shift in perception has created a negative feedback loop for the euro: without strong, concrete benefits for the EU economy, the deal has instead highlighted the bloc’s limited leverage in global trade negotiations, increasing concerns over competitiveness and economic marginalization.

The U.S. dollar has strengthened on the back of this trade asymmetry and anticipation of key central bank meetings. The dollar index rose to 98.815, its highest in a month, and is set to post its first monthly gain of the year. As investors weigh the implications of the Fed’s upcoming policy announcement, the greenback continues to attract safe-haven flows.

While the Fed is expected to keep interest rates unchanged, all eyes will be on Chair Jerome Powell’s comments for clues on future monetary policy. Internal dissent is anticipated from Governors Christopher Waller and Michelle Bowman, both of whom may push for rate cuts in alignment with President Trump’s vocal criticism of current Fed policy.

This potential split within the Federal Open Market Committee (FOMC) has heightened market sensitivity. As Kristina Clifton from Commonwealth Bank of Australia warned, dissent at this meeting could be perceived as politically motivated, potentially undermining perceptions of Fed independence.

Elsewhere, major currencies showed relative stability. The British pound traded at $1.3358, while the Australian dollar was at $0.6517, holding gains following Australia's soft inflation data and heightened rate cut expectations. The Japanese yen firmed modestly to 148.20 per dollar ahead of the Bank of Japan's meeting, where Governor Kazuo Ueda’s guidance on rate hikes will be closely scrutinized following Japan’s own trade agreement with the U.S.

The offshore Chinese yuan was little changed at 7.178, reflecting limited movement despite U.S.–China trade truce talks. While the discussions in Stockholm were deemed “constructive,” no breakthroughs were announced. The looming August 12 expiration of the tariff truce leaves global markets in suspense.

The euro’s recent slump reflects both immediate reaction to a trade deal perceived as economically disadvantageous and broader investor caution in the face of uncertain central bank policy paths. The causal chain is clear: the imbalance in the EU–U.S. agreement has diminished confidence in Europe’s economic autonomy, while anticipation of Fed and BOJ decisions adds monetary policy risk.

Currency markets are poised for sharper movements depending on outcomes from central bank meetings and Trump’s next trade moves. Until clearer signals emerge, major currencies like the euro are likely to remain range-bound, with sentiment dictated less by past gains and more by forward-looking risks.

Global oil benchmarks edged higher in early Wednesday trading, extending a strong rally from the previous session. Brent crude rose to $72.65 per barrel, while West Texas Intermediate (WTI) held at $69.23, both marking their highest settlements since June 20. The trigger was a significant geopolitical shift: President Trump’s decision to move up his Russia ultimatum from 50 days to 10–12 days, threatening 100% secondary tariffs on countries continuing to trade with Moscow.

This escalation introduces a major source of potential supply disruption in global oil markets. Secondary sanctions, if implemented, would penalize not only Russia but also any trading partner particularly large U.S. allies and importers that maintains oil dealings with Russia. As ING analysts noted, such a move would likely deter key buyers and squeeze availability, tilting the market toward a supply deficit.

U.S. Treasury Secretary Scott Bessent, speaking at trade talks in Stockholm, signaled that China, the largest buyer of Russian oil, had been formally warned about facing punitive tariffs. While China is unlikely to comply with U.S. sanctions due to strategic alignment with Moscow and energy dependency, India has shown willingness to reduce Russian imports. According to J.P. Morgan, this could jeopardize up to 2.3 million barrels per day (bpd) of Russian exports, representing a significant portion of global supply.

The causal link between Trump’s policy threat and price action is direct. If secondary tariffs are enforced and countries reduce purchases from Russia, crude flows will be disrupted, tightening supply. The possibility that OPEC+ might respond by relaxing some production cuts provides a partial offset, but ING warns that even such a response may not fully bridge the resulting supply gap under worst-case scenarios.

Adding to the bullish tone in oil markets is the recent U.S.–EU trade agreement, which helped avert a full-blown trade war. While the deal includes 15% tariffs on EU exports to the U.S., it reduces overall global trade uncertainty, which had previously clouded the demand outlook. Averting an escalation with Europe preserves confidence in near-term economic activity, particularly in energy-intensive sectors.

This interaction between trade diplomacy and energy markets reveals a correlation more than causation: while the deal itself does not directly impact oil supply, the broader confidence it restores can sustain demand expectations, supporting prices.

Meanwhile, oil supply from Venezuela remains in limbo. Despite recent discussions, U.S. authorizations for foreign energy firms to resume operations with PDVSA are still pending. If approvals are granted, Venezuelan crude could reenter global markets, easing pressure from Russian supply cuts. However, the timeline remains uncertain and cannot be factored in as an imminent relief valve.

Oil’s recent price surge reflects the heightened risk of a global supply squeeze if the U.S. follows through with its secondary tariff threats. The causality is clear: the potential for restricted Russian exports, combined with limited short-term alternatives, creates a structurally tighter market. Although OPEC+ flexibility and stalled Venezuelan output may offer relief, near-term momentum favors higher prices especially as geopolitical and trade policy risks become more acute heading into August. The balance between diplomatic outcomes and enforcement actions will shape the trajectory for energy markets in the weeks ahead.

Australia's consumer price index (CPI) for the June quarter provided unexpected relief for policymakers, as inflation cooled more than forecast. Core inflation, measured by the RBA’s preferred trimmed mean, rose just 0.6% quarter-on-quarter below the 0.7% forecast bringing annual core inflation down to 2.7%, its lowest since 2022 and well within the central bank’s 2–3% target band. Headline inflation also slowed to 2.1% annually, a four-year low.

This inflation moderation has effectively removed the RBA’s earlier hesitation. After surprising markets with a pause in July amid inflation concerns, the RBA now has stronger evidence that disinflation is progressing, aligning with its cautious easing trajectory.

Financial markets have moved swiftly in response. The probability of a 25-basis-point rate cut at the RBA’s next meeting on August 12 is now seen as near-certain. The cash rate, currently at 3.85%, is expected to drop to 3.10% or lower by year-end, with major banks like Westpac forecasting additional cuts in November, February 2026, and May 2026.

The Australian dollar was largely unmoved by the data, holding firm at $0.6512, reflecting that easing expectations were already priced in.

The report’s components reinforce the case for further policy easing. Price growth in core areas such as new dwellings and services showed notable declines. Inflation for new housing construction fell to just 0.7% annually, compared to 1.6% in Q1 and a peak near 21% in 2022. Project home builders are now offering incentives and discounts amid softer demand, signaling that prior inflation pressures from construction have sharply reversed.

Services inflation a more persistent component also eased to 3.3%, with rents and insurance leading the deceleration. This is especially significant as services have been a key concern for central banks globally due to their resistance to cyclical price swings.

The inflation cool-down appears causally linked to emerging slack in the labour market. Australia’s jobless rate rose to 4.3% in June, the highest in 3.5 years, suggesting reduced wage pressures. With wage growth stabilizing and demand in key sectors softening, inflationary momentum is retreating across both goods and services.

Temporary government subsidies, such as rebates on electricity and child care, helped suppress headline CPI, though their expiry may cause a near-term bump in future inflation readings. However, the underlying disinflation trend remains intact and broad-based.

Australia’s Q2 inflation report confirms that disinflation is not only progressing but increasingly entrenched. The data supports a clear causal link between cooling domestic demand, easing labour conditions, and the sustained moderation in core prices. As a result, the RBA is now widely expected to resume its rate-cut cycle in August, with multiple cuts likely into 2026. The policy focus is shifting from containing inflation to supporting growth amid emerging economic slack.

Asian equity markets opened Wednesday with mild gains, reflecting a mixed but measured investor response to an event-heavy week. The MSCI Asia-Pacific Index outside Japan rose 0.3%, led by Taiwan, while Australia’s ASX 200 climbed 0.7%. In contrast, Japan’s Nikkei slipped 0.03% and Hong Kong’s Hang Seng Index declined by 0.4%.

These modest fluctuations suggest investors are positioning defensively ahead of critical macroeconomic developments, especially the U.S. Federal Reserve's policy announcement later in the day and President Donald Trump’s August 1 deadline for “Liberation Day” tariffs.

Market participants broadly expect the Federal Reserve to hold rates steady, though a rare internal dissent in favor of rate cuts is possible. With the U.S. labor market near full employment and tariff-driven inflation a growing concern, the Fed is adopting a “wait-and-see” approach, according to ANZ economist Tom Kenny. ANZ projects a potential rate cut at the Fed’s September meeting, suggesting that policymakers view the inflationary impact of tariffs as potentially persistent rather than transitory.

Ahead of the Fed announcement, demand for U.S. government bonds remained strong. A successful seven-year Treasury auction pushed 10-year yields down to 4.328%, their lowest since early July. Two-year yields were steady at 3.873%, reflecting muted rate hike expectations in the near term.

Meanwhile, trade tensions continue to influence market psychology. Talks between the U.S. and China concluded without substantive progress, although both sides agreed to seek an extension to their 90-day tariff truce. Trump retains discretion over whether to allow the truce to lapse on August 12, which could result in tariffs surging into triple-digit territory an outcome that remains a high-risk scenario for global markets.

India is also preparing for possible 20–25% tariffs on some exports to the U.S., according to local officials, while South Korean ministers held emergency talks with U.S. Commerce Secretary Howard Lutnick to secure a last-minute agreement.

Despite recent bilateral trade deals like the one with Japan, which paves the way for potential BOJ rate hikes overall tariff uncertainty continues to dampen regional confidence. This was reflected in Japan’s flat equity performance even as Australian and Taiwanese markets posted moderate gains.

Investor sentiment is also tethered to the outcome of U.S. corporate earnings. Microsoft and Meta are set to report results that could determine the tone for the remainder of the earnings season. As analyst Chris Weston notes, the expectations bar for tech megacaps is exceptionally high, and anything short of standout performance could disappoint.

On the commodities front, Brent crude edged up to $72.65 per barrel, buoyed by concerns over supply constraints. Trump’s abbreviated deadline for Moscow to de-escalate the war in Ukraine has increased geopolitical tension, potentially affecting energy flows.

The slight upward movement in Asian equities masks deeper undercurrents of volatility linked to trade policy, central bank decisions, and corporate earnings performance. The causal chain is multifaceted: unresolved tariff risks are weighing on sentiment, while anticipated policy pauses by the Fed and BOJ reflect economic fragility amid inflation concerns.

Though the EU–U.S. trade agreement has brought temporary stability to European markets, the broader global environment remains fluid. Investors in Asia, therefore, appear to be holding their positions, awaiting decisive signals that could either extend market calm or reignite volatility depending on developments in Washington, Beijing, and global corporate boardrooms.

1. Bessent: The tariff level set for August 1st will be temporary if negotiations are sincere.

2. Trump says possible 20%-25% tariffs on India, but final decision not yet made.

3. China-U.S. Economic and Trade Talks held in Stockholm, Sweden.

4. UK says it will recognize the Palestinian State in September.

5. Fed's July Meeting voter count drops to 11; Kugler absent for personal reasons.

6. U.S. Job Openings fall to 7.44 million, signaling a gradual cooling of labor market.

U.S. Treasury Secretary Scott Bessent stated in an interview with CNBC that the reprisal tariff rate set to take effect on August 1st will remain in place for a few days to a few weeks, provided countries continue to advance and engage in sincere negotiations. Regarding the August 1st tariff rate, Bessent noted he doesn't think this is the end of the world. He also mentioned that President Trump has, in some cases, been satisfied with tariff revenue so much, so that it outweighs the value of reaching an agreement itself.

U.S. President Donald Trump indicated that India could face tariffs of 20% to 25%, but emphasized that the final rate remains undecided as the two countries continue trade talks ahead of the August 1 tariff deadline. "I think so," Trump responded on Tuesday when asked if the tariff level against India could reach that range. India has always been a good friend, but " India is the highest — one of the highest tariff nations in the world." Trump said while returning to Washington aboard Air Force One after a five-day visit to Scotland, explaining that this approach is not working.

From July 28 to 29 local time, He Lifeng, Chinese lead negotiator and Vice Premier of the State Council, met with U.S. lead negotiator Scott Bessent, U.S. Treasury Secretary, and Robert Lighthizer, U.S. Trade Representative, in Stockholm, Sweden, for China-U.S. economic and trade talks. The two sides conducted frank, in-depth, and constructive exchanges on economic and trade issues of mutual concern, including China-U.S. economic and trade relations and macroeconomic policies. They also reviewed and affirmed the consensus reached at the China-U.S. economic and trade talks in Geneva and the implementation of the London framework.

Under the consensus from the talks, both sides will continue to push for the scheduled 90-day extension of the suspended 24% U.S. retaliatory tariffs and China's corresponding countermeasures. He Lifeng stated that China-U.S. economic and trade teams should be guided by the important consensus reached in the phone call between the two presidents on June 5, adhere to the principles of mutual respect, peaceful coexistence, and win-win cooperation, respect each other's concerns, further consolidate consensus, and deepen mutual trust.

China's position on China-U.S. economic and trade relations has been consistent: the essence of these relations is mutual benefit and win-win cooperation. The two sides share extensive common interests and a broad space for cooperation in the economic and trade sphere; cooperation benefits both, while confrontation harms both. A stable, healthy, and sustainable China-U.S. economic and trade relationship not only serves their respective development goals but also promotes the development and stability of the global economy. Moving forward, the two sides should continue to follow the important consensus from the presidential phone call, fully leverage the role of the China-U.S. economic and trade consultation mechanism, continuously enhance consensus, reduce misunderstandings, strengthen cooperation, further deepen dialogue and consultations, and strive for more win-win outcomes. The U.S. side noted that a stable U.S.-China economic and trade relationship is of great significance to both countries and even the global economy. It expressed willingness to work with China to continue resolving economic and trade differences through the consultation mechanism, push for more consultation outcomes, and further stabilize bilateral economic and trade ties.

On July 29th, British Foreign Secretary David Lammy announced at the International Conference on Implementing the Two-State Solution held at UN Headquarters that the UK will recognize the State of Palestine during the UN General Assembly in September. According to British media reports, over 200 UK lawmakers have recently called on Prime Minister Keir Starmer to immediately recognize the Palestinian state. In a statement on the situation in Gaza on July 25th, Starmer noted that the UK aims to advance the peace process and urgently calls for a ceasefire, with recognizing the Palestinian state being one of the steps.

Federal Reserve Governor Adriana Kugler will miss this week's policy meeting due to personal reasons, reducing the number of voters for the interest rate decision to 11. Although Governors Christopher Waller and Michelle Bowman may dissent in favor of a rate cut, the committee still has a sufficient majority to keep rates unchanged. There are no alternates for governor seats, though the chair position can be substituted.

Data released by the U.S. Bureau of Labor Statistics on Tuesday showed that job openings dropped to 7.44 million in the month, down from the revised 7.71 million in May and below economists' prior expectation of 7.5 million. By sector, the decline in job openings was broad-based, concentrated in accommodation and food services, health care, and financial and insurance activities.

The report supports the view that "the labor market is cooling gradually," though at a slow pace. While job openings remain above pre-pandemic averages, indicating relatively healthy labor demand, hiring has slowed and the time it takes for unemployed individuals to find new jobs has lengthened.

Earlier, Federal Reserve Chair Jerome Powell said the labor market is "strong" and noted that the impact of tariffs on inflation remains unclear, which he cited as one reason for keeping rates unchanged. Markets widely expect the Fed to hold rates steady at this meeting, though some officials may dissent and advocate supporting the cooling labor market instead.

UTC+8 13:30 ​ France Q2 GDP First Estimate

UTC+8 16:00 Germany Q2 GDP First Estimate

UTC+8 17:00 Eurozone Q2 GDP First Estimate

UTC+8 20:15 US July ADP Employment Change

UTC+8 20:30 US Q2 Real GDP First Estimate

UTC+8 21:45 Bank of Canada July Interest Rate Decision

UTC+8 22:00 US June Pending Home Sales MoM

UTC+8 02:00 Federal Reserve July Interest Rate Decision

UTC+8 02:30 Federal Reserve Chair Jerome Powell Press Conference on Monetary Policy