Key Elements of EU-US Trade Deal

Economic

Summary:

The United States and the European Union agreed on aframework trade deal, ending months of uncertainty for industries and consumers on both sides of the Atlantic.

Here are the main elements of the deal:

* Almost all EU goods entering the U.S. will be subject to a 15% baseline tariff, including cars, which currently face 27.5%, as well as semiconductors and pharmaceuticals. The 15% tariff is the maximum tariff and is not added to any existing rates.

* The U.S. is to announce the result of its 232 trade investigations in a few weeks and decide on tariff rates for the sectors under investigation. But the EU-U.S. deal already secures a 15% tariff for European chips and pharmaceuticals, so the results of the investigations will not change that, U.S. officials said. It is not yet clear, however, if the same 15% rate has been set for timber and copper, which are also under U.S. 232 investigation.

* The U.S. and EU will have zero-for-zero tariffs on all aircraft and their components, certain chemicals, certain generic drugs, semiconductor equipment, some agricultural products, natural resources and critical raw materials. More products would be added.

* The situation for wine and spirits - a point of friction on both sides of the Atlantic - is still to be established.

* Tariffs on European steel and aluminium will stay at 50%, but European Commission President Ursula von der Leyen said these would later be cut and replaced by a quota system.

* The EU pledged to make $750 billion in strategic purchases, covering oil, gas, nuclear, fuel and chips during U.S. President Donald Trump's term in office.

* The EU pledged to buy U.S. military equipment.

* European companies are to invest $600 billion in the U.S. over the course of Trump's second term. Unlike Japan’s package - which Tokyo says will consist of equity, loans and guarantees from state-run agencies of up to $550 billion to be invested at Trump's discretion - EU officials said the Europe's $600 billion investment pledge is based on private sector projects already in the pipeline.

Source: Reuters

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Blue River

Technical Analysis

The euro is busy on Monday morning. EUR/USD started the week in positive territory and rose as much as 0.30%, but has reversed directions in the European session and is trading at 1.1677, down 0.54% on the day.

EU and the US reach a trade deal

US President Trump can add another feather to his MAGA cap, with news that the European Union and the United States reached a trade agreement over the weekend. President Trump had threatened to hit the EU with 30% tariffs if a deal wasn’t reached by Aug. 1 and the specter of a nasty trade war between the largest two economies in the world has been averted.

A deal is of course good news but it’s important to keep in mind that the sides have agreed to a framework agreement, which is thin on details. Some contentious issues remain, such as the US tariff of 50% on steel and aluminum.

The deal mirrors the US-Japan agreement which was announced last week. The US will eliminate some tariffs, such as on aircraft parts and generic drugs, but most European products will face a tariff of 15%, which will make European imports more expensive for US consumers. The EU has also agreed to increase investment in the US by $600 billion and purchase $750 billion in US energy products.

The German auto industry is one of the deal’s big winners, as the 15% tariff will be easier to swallow than the current rate of 27.5%. The US-Japan deal puts a 15% tariff on Japanese motor vehicles, which would have put European automakers at a major disadvantage without a EU-US deal.

Trump is moving ahead and reaching deals with major trade partners, which is removing uncertainty and raising risk appetite. Investors are hoping that other key nations, such as Canada and South Korea, will follow soon with trade agreements with the US.

EUR/USD Technical

EUR/USD has pushed below support at 1.1735 and 1.1710 and is testing 1.1677. Below, there is support at 1.1652
There is resistance at 1.1768 and 1.1793

EURUSD 1-Day Chart, July 28, 2025

Source: ACTIONFOREX

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Winkelmann

Economic

Cryptocurrency

Dollar-Cost Averaging (DCA) is a popular investment strategy that involves consistently purchasing a fixed amount of an asset at regular intervals, regardless of its current market price. In the world of cryptocurrency — where volatility is the norm — DCA offers traders a way to reduce the emotional impact of price swings and potentially lower the average cost of their investment over time.

For crypto traders, DCA is especially useful in mitigating the risk of buying into the market at the wrong time. Instead of attempting to time the market, which even experienced traders struggle with, DCA encourages a steady and disciplined approach. By purchasing smaller amounts at different price points, traders can avoid the pitfalls of buying a large position during a price peak.

Let’s say a trader wants to invest $1,000 in Bitcoin. Rather than investing the entire amount in one go, they might choose to invest $100 every week for 10 weeks. If the price fluctuates during that time, the average purchase price could be lower than buying in a single lump sum at a high point. This approach helps smooth out the effects of volatility and can provide better long-term results for traders who are not trying to make quick profits.

One of the key psychological benefits of DCA is that it reduces anxiety and impulsiveness. Crypto markets are known for their dramatic price shifts, and new investors often panic during downturns or become overly enthusiastic during bull runs. With DCA, the focus shifts from short-term market movements to long-term accumulation, encouraging patience and discipline.

However, DCA is not a perfect strategy. It may lead to lower returns compared to investing a lump sum during a prolonged bull market. Also, in highly speculative altcoins with uncertain long-term prospects, DCA can magnify losses if the asset ultimately fails. Therefore, it’s important to combine DCA with solid research and sound asset selection.

In summary, Dollar-Cost Averaging is a simple yet powerful strategy for crypto traders looking to navigate market volatility. By spreading out purchases over time, traders can minimize risk, reduce emotional decision-making, and build positions with greater consistency. While not foolproof, DCA remains a valuable tool — especially for those new to crypto or looking to build wealth steadily over time.

Source: CryptoSlate

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Michelle

Economic

Forex

In the end, Europe found it lacked the leverage to pull Donald Trump's America into a trade pact on its terms and so has signed up to a deal it can just about stomach - albeit one that is clearly skewed in the U.S.'s favour.

As such, Sunday's agreement on a blanket 15% tariff after a months-long stand-off is a reality check on the aspirations of the 27-country European Union to become an economic power able to stand up to the likes of the United States or China.

The cold shower is all the more bracing given that the EU has long portrayed itself as an export superpower and champion of rules-based commerce for the benefit both of its own soft power and the global economy as a whole.

For sure, the new tariff that will now be applied is a lot more digestible than the 30% "reciprocal" tariff which Trump threatened to invoke in a few days.

While it should ensure Europe avoids recession, it will likely keep its economy in the doldrums: it sits somewhere between two tariff scenarios the European Central Bank last month forecast would mean 0.5-0.9% economic growth this year compared to just over 1% in a trade tension-free environment.

But this is nonetheless a landing point that would have been scarcely imaginable only months ago in the pre-Trump 2.0 era, when the EU along with much of the world could count on U.S. tariffs averaging out at around 1.5%.

Even when Britain agreed a baseline tariff of 10% with the United States back in May, EU officials were adamant they could do better and - convinced the bloc had the economic heft to square up to Trump - pushed for a "zero-for-zero" tariff pact.

It took a few weeks of fruitless talks with their U.S. counterparts for the Europeans to accept that 10% was the best they could get and a few weeks more to take the same 15% baseline which the United States agreed with Japan last week.

"The EU does not have more leverage than the U.S., and the Trump administration is not rushing things," said one senior official in a European capital who was being briefed on last week's negotiations as they closed in around the 15% level.

That official and others pointed to the pressure from Europe's export-oriented businesses to clinch a deal and so ease the levels of uncertainty starting to hit businesses from Finland's Nokiato Swedish steelmaker SSAB.

"We were dealt a bad hand. This deal is the best possible play under the circumstances," said one EU diplomat. "Recent months have clearly shown how damaging uncertainty in global trade is for European businesses."

NOW WHAT?

That imbalance - or what the trade negotiators have been calling "asymmetry" - is manifest in the final deal.

Not only is it expected the EU will call off retaliation and remain broadly open to U.S. goods on more favourable terms, but it has also pledged $600 billion of investment in the United States over the course of Trump's term in office.

As talks unfolded, it became clear that the EU came to the conclusion it had more to lose from all-out confrontation.

The retaliatory measures it threatened totalled some 93 billion euros - less than half its U.S. goods trade surplus of nearly 200 billion euros.

True, a growing number of EU capitals were also ready to envisage wide-ranging anti-coercion measures that would have allowed the bloc to target the services trade in which the United States had a surplus of some $75 billion last year.

But even then, there was no clear majority for targeting the U.S. digital services which European citizens enjoy and for which there are scant homegrown alternatives - from Netflixto Uberto Microsoftcloud services.

For now, the deal does not shift the dial significantly on the already modest near-term expectations for the European economy, which at least is seen buoyed by increased German spending on defence and infrastructure in the coming years.

"We therefore still expect a modest slowing in (euro area) growth in 2H25," said Greg Fuzesi, euro area economist at JP Morgan, who also expected the ECB to make one further rate cut on top of 200 basis points of easing over the past year.

It remains to be seen whether the lop-sided deal will prompt European leaders to push ahead with the economic reforms and diversification of trading allies to which they have long paid lip service but which have been held back by national divisions.

Describing the deal as a painful compromise that was an "existential threat" for many of its members, Germany's BGA wholesale and export association said it was time for Europe to reduce its reliance on its biggest trading partner.

"Let's look on the past months as a wake-up call," said BGA President Dirk Jandura. "Europe must now prepare itself strategically for the future - we need new trade deals with the biggest industrial powers of the world."

Source: Reuters

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Gerik

Economic

Tech Sector Faces Sharp Sell-Off Amid Elevated Valuations

In a marked shift in sentiment, hedge funds pulled out of technology stocks at the fastest pace in twelve months last week, even as the S&P 500 reached fresh all-time highs. According to a client note from Goldman Sachs seen by Reuters, the exodus reflects rising investor caution toward sectors with elevated valuations, particularly as 10-year bond yields remain high and unpredictable.

The S&P 500, where seven of the ten largest companies by market cap are tech-related, has surged approximately 28% from its 2025 low, while the Nasdaq Composite has climbed 38% in the same period. Despite this strength, valuations are now stretched: the forward price-to-earnings ratio for the index sits at 23.11 near five-month highs and around 30% above the recent decade average.

No Broad Shorting, But Clear Risk Reduction

Rather than aggressively shorting tech, hedge funds have unwound long positions and exited trades, indicating a shift in conviction rather than outright pessimism. The rotation was concentrated in North American and European markets, with hedge funds selling off shares across all tech segments, including semiconductors, software, and IT services.

This repositioning marks the largest tech sector liquidation by hedge funds since July 2024, according to Goldman. The move underscores a broader market reassessment: while high-growth tech names had led much of the post-2025 recovery, their sensitivity to interest rates and lofty valuations now make them vulnerable to macroeconomic uncertainty.

Consumer Staples Emerge as Safe Haven

In contrast to the tech retreat, consumer staples have seen a notable inflow. For the fourth consecutive week, hedge funds increased their exposure to companies in the food, beverage, and personal care sectors. These trades were almost entirely long positions indicating confidence in rising prices rather than hedging strategies.

The rotation suggests hedge funds are seeking stability and defensiveness amid growing uncertainty around interest rates and stretched equity valuations. Florian Ielpo of Lombard Odier Investment Managers noted that future equity gains may rely on a decline in long-term interest rates, but current market dynamics offer no clear signal that such a shift is imminent.

Positioning for Resilience Amid Macroeconomic Ambiguity

The hedge fund flight from tech and shift toward consumer staples signals a recalibration of risk in an overheated equity market. With growth stocks trading at historically rich valuations and yields remaining elevated, institutional investors are rotating into sectors with steadier earnings and lower sensitivity to macro volatility.

Until there is greater clarity on the Federal Reserve’s rate trajectory or a sustained cooling in bond yields, this defensive posture may persist. While the tech sector’s long-term prospects remain tied to innovation and AI expansion, hedge funds appear to be taking a tactical pause, opting instead for resilience over momentum.

Source: Reuters

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Gerik

Economic

Sales Padding Through Pre-Insurance Raises Credibility Concerns

A Reuters investigation reveals a troubling industry-wide tactic used by Chinese car manufacturers and dealerships: insuring vehicles before they are sold to consumers. The practice intended to register cars as "sold" for the sake of hitting internal sales targets has grown more prevalent amid a fierce price war and chronic overcapacity in the world’s largest auto market. While previously reported at select EV brands like Neta and Zeekr, the issue now appears far more systemic.

A review of 97 consumer complaints across three of China’s leading platforms 12365auto.com, China.com’s 315 platform, and Sina’s Black Cat points to brands such as BYD, Toyota, Volkswagen, Buick, Changan, Li Auto, and Geely being implicated. In many cases, consumers only learned after the transaction that their new vehicles had been insured under third-party names prior to purchase. This not only compromises customer transparency but misrepresents retail sales data to investors and regulators.

Inventory Distortion and Misleading Demand Signals

This form of data manipulation distorts the real state of dealer inventories and exaggerates perceived demand. Yale Zhang, head of Automotive Foresight, warned that misreading such inflated wholesale numbers could lead automakers to schedule unnecessary production increases, further worsening overcapacity. As more than 100 brands compete in China’s saturated market, reliance on sales-padding tactics may be masking a deeper issue: structural demand weakness and a fragile retail environment.

From 2021 to 2025, 48 verified complaints on 12365auto.com alone involved customers discovering their cars had been insured before purchase. Another 49 complaints across China.com and Black Cat showed similar patterns. In 14 cases, dealers explicitly admitted to the tactic being used to meet sales targets. Buyers described feeling deceived and misled, particularly when vehicles were registered in names not their own, raising both legal and ethical questions.

In parallel, Reuters identified five Chinese court rulings between 2023 and 2025 involving consumers who sued dealerships over this issue. In three cases, the courts sided with buyers and awarded compensation. Although only a small sample, these legal outcomes suggest growing consumer awareness and judicial willingness to intervene.

Corporate and Regulatory Responses Diverge

Several automakers, including GM China and Volkswagen, denied using pre-insurance schemes to pad figures, though both promised to investigate complaints. Honda’s GAC joint venture stated it prohibits such behavior and pledged sanctions against offending dealers. However, other key players BYD, Changan, Nissan, and Li Auto did not respond to Reuters’ inquiries, deepening concern over corporate accountability.

Official media in 15 provinces documented at least 29 cases where local dealers, including those representing brands such as SAIC VW, GAC Toyota, and Dongfeng Nissan, acknowledged using the practice to book sales. In many cases, regional media are state-affiliated, highlighting the issue’s growing visibility and potential for regulatory consequences.

The Rise of "Zero-Mileage" Used Cars

Vehicles insured before being delivered to buyers are often dubbed “zero-mileage used cars” in China. Though physically new, they are technically second-hand due to their registration history. This phenomenon has emerged in the wake of a pricing war that began in 2023, when Li Auto and others started using insurance data to report weekly sales on social media. Critics argue this practice has warped competition and created unsustainable sales pressure, especially among smaller brands struggling to remain solvent.

The China Association of Automobile Manufacturers (CAAM) recently condemned reliance on insurance-based sales rankings, calling them unreliable and a factor behind increasingly “vicious” market competition. CAAM’s statement indicates rising concern within the industry that the credibility of Chinese auto data is deteriorating a situation that could deter investors and challenge the legitimacy of state-reported figures.

Short-Term Gains at the Expense of Market Integrity

While padding sales figures through pre-insurance may help automakers hit quarterly targets, the long-term consequences for market transparency, consumer trust, and industrial efficiency are severe. As China’s auto market approaches a critical inflection point where survival will depend more on product quality, innovation, and global competitiveness than manipulation the current trend risks eroding both reputations and regulatory trust.

Unless curbed through coordinated enforcement and corporate reform, the systemic use of "zero-mileage" sales will continue to distort an already fragile market. Consumer backlash and court involvement suggest the issue has moved beyond isolated malpractice and now challenges the integrity of China’s automotive sector as a whole.

Source: Reuters

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Glendon

Economic

European companies were left wondering on Monday whether to cheer a hard-won US trade deal or lament a still sharp jump in tariffs versus those in place before President Donald Trump's second term.

A day earlier, European leaders heralded a framework trade deal with the United States that would impose a 15% import tariff on most EU goods, averting a spiralling battle between two allies which account for almost a third of global trade.

Although the deal is better than the 30% rate threatened by Trump and will bring clarity for European makers of cars, planes and chemicals, the 15% baseline tariff is well above initial hopes of a zero-for-zero agreement. It is also higher than the US import tariff rate last year of around 2.5%.

"Those who expect a hurricane are grateful for a storm," said Wolfgang Große Entrup, head of the German Chemical Industry Association VCI, calling for more talks to reduce tariffs that he said were "too high" for Europe's chemical industry.

"Further escalation has been avoided. Nevertheless, the price is high for both sides. European exports are losing competitiveness. US customers are paying the tariffs."

The deal, which also includes US$600 billion (RM2.5 trillion) of EU investments in the United States and US$750 billion of EU purchases of US energy over Trump's second term, includes some exemptions, even if details are still to be ironed out.

Carmakers Volkswagen and Stellantis, among others, will face the 15% tariff, down from 25% under the global levy imposed by Trump in April.

Stellantis shares rose 3.5% and car parts maker Valeo was up 4.7% in early trade. German pharma group Merck KGaA gained 2.9%.

Aircraft and aircraft parts will be exempt — good news for French planemaker Airbus — as will certain chemicals, some generic drugs, semiconductor equipment, some farm products, natural resources and critical raw materials.

Shares in the world's biggest chip maker ASML rose more than 4%, among the biggest gainers on the pan-European STOXX 600 index.

Still to be negotiated

Dutch brewer Heineken cheered the deal, with CEO Dolf van den Brink welcoming the certainty it brought.

The world's number two brewer sends beer, especially its namesake lager, to the US from Europe and Mexico, and has also suffered from the indirect effect on consumer confidence in important markets like Brazil.

The rate on spirits that could impact firms such as Diageo, Pernod Ricard and LVMH, is still being negotiated though.

"It seems that in coming days there could be negotiations for certain agricultural products, zero for zero, which is what the European and US sectors have been calling for," said Jose Luis Benitez, director of the Spanish Wine Federation.

Benitez added that a 15% rate could put Europe at a disadvantage versus other wine exporting regions subject to 10% tariffs.

"If there are any exceptions, we hope that the (European) Commission understands that wine should be one of them."

Lamberto Frescobaldi, the president of Italian wine body UIV, said on Sunday that 15% tariffs on wine would result in a loss of €317 million over the next 12 months, though the group was waiting to see the final deal text.

Others said that the agreement — which followed on the heels of a similar one with Japan — helped bring greater clarity for company leaders, but still threatened to make European firms less competitive.

"While this agreement puts an end to uncertainty, it poses a significant threat to the competitiveness of the French cosmetics industry," said Emmanuel Guichard, secretary general of French cosmetics association Febea, which counts L'Oreal, LVMH and Clarins among its members.