Citi Lifts Gold Forecast to $3,500 as US Outlook Darkens and Safe-Haven Demand Surges

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Summary:

Citi raises its three-month gold forecast to $3,500/oz, citing deteriorating US growth prospects, persistent inflation from tariffs, and weakening institutional trust as key drivers pushing prices to new highs....

Gold Poised for New Highs as Citi Revises Price Outlook Amid Mounting US Concerns

Citi has raised its three-month gold price forecast to $3,500 per ounce, up from the previous $3,300 estimate, as signs of economic fragility in the United States and intensifying global risks bolster investor appetite for the safe-haven asset. The bank now expects the trading range to shift upward to $3,300–$3,600, reflecting a more bullish stance rooted in macroeconomic and geopolitical deterioration.

At the time of the revised forecast, spot gold was trading at $3,356.88 per ounce, marking a continuation of a trend that has seen prices nearly double since mid-2022. This surge is closely tied to mounting anxieties over slowing US growth, weakened labor data, and the growing perception of diminished credibility in federal economic institutions.

Tariffs and Weak Data Amplify Demand for Safe-Haven Assets

Citi’s outlook hinges on several compounding variables, foremost among them the ongoing tariff escalation spearheaded by President Donald Trump. The recent wave of steep tariffs imposed on key trading partners such as Canada, Brazil, India, and Taiwan is expected to exert inflationary pressure in the second half of 2025. According to US Trade Representative Jamieson Greer, these tariffs are unlikely to be withdrawn in the near term, suggesting that cost pressures could persist through year-end.

Simultaneously, the US labor market has shown unmistakable signs of weakening. July’s payroll growth of just 73,000 jobs, paired with the dramatic downward revision of June figures to only 14,000, has significantly altered expectations for monetary policy. Markets are now pricing in an 81 percent chance of a Federal Reserve rate cut in September, as indicated by the CME FedWatch tool. Lower interest rates, which reduce the opportunity cost of holding non-yielding assets like gold, are contributing to the metal’s upward momentum.

Institutional Credibility and Geopolitical Risk Feed into Price Revaluation

Beyond economic fundamentals, Citi also flags an erosion of trust in US institutions as a growing factor in gold’s appeal. The abrupt firing of the Bureau of Labor Statistics commissioner and increased political influence over the Federal Reserve have raised questions about data reliability and the central bank's autonomy. This environment has historically driven investors toward hard assets as a hedge against uncertainty and fiat currency instability.

In parallel, global geopolitical tensions remain elevated, particularly around the unresolved Russia-Ukraine conflict. Such external risks provide additional impetus for diversification into gold, particularly among sovereign and institutional investors.

Robust Demand Fundamentals Underpin Structural Price Strength

Citi estimates that gross gold demand has climbed more than one-third since mid-2022, a surge underpinned by robust investment flows, moderate but sustained central bank buying, and resilient jewelry demand in the face of higher prices. Unlike prior bull cycles driven primarily by financial speculation, this current phase appears broader-based, with physical gold consumption and strategic reserves playing critical roles.

The durability of this demand, according to Citi, supports continued price appreciation despite already elevated levels. Central banks, particularly in emerging markets, have maintained consistent purchase programs as part of long-term diversification strategies, while private investors are reallocating toward gold amid ongoing volatility in equities and currency markets.

Citi’s upward revision of its gold forecast reflects a confluence of economic deterioration, institutional skepticism, and heightened geopolitical risk. As inflationary pressures remain persistent due to tariffs and the Federal Reserve moves closer to a potential rate cut, gold continues to benefit from both cyclical and structural tailwinds. With spot prices already near record levels and demand showing no signs of retreat, the $3,500 target may serve less as a ceiling and more as a stepping stone in a broader revaluation of gold’s role in a fractured global economic order.

Source: Reuters

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Economic

Markets Recoil as Labor Data Revisions Unleash Political and Economic Shockwaves

The US labor market, long viewed as a pillar of economic resilience, now faces growing scrutiny following a severe downward revision in nonfarm payrolls and a politically charged fallout. Revisions to May and June’s employment data removed 258,000 jobs from previous counts, drastically reshaping market perceptions of US labor strength. This, combined with July’s lower-than-expected gain of 73,000 jobs and a rise in the unemployment rate to 4.2 percent, signals a clear slowdown that challenges prior optimism.

Markets responded swiftly. The S&P 500 tumbled 1.6 percent on Friday its worst performance since May 21 breaking a 26-session stretch of unusually low volatility. The Nasdaq Composite also plunged, and the pan-European Stoxx 600 dropped 1.89 percent, its largest one-day fall since April, as investors recalibrated expectations across global equities.

Trump’s Firing of BLS Head Fuels Institutional Credibility Concerns

The most controversial development came from the White House. President Donald Trump, in a Truth Social post, accused Bureau of Labor Statistics Commissioner Erika McEntarfer of falsifying employment figures in advance of the election and subsequently terminated her position. The move drew bipartisan criticism. Senator Ron Wyden framed it as an attempt to manipulate public perception, while Senator Rand Paul dismissed the act as futile, stating that altering personnel cannot change statistical realities.

This decision has sparked broader fears about the erosion of institutional independence in economic data reporting. Comparisons have already emerged to China’s 2023 suspension of youth unemployment data, amplifying concerns that the US is moving toward selective transparency at the federal level.

Rate Cut Expectations Accelerate, But Uncertainty Rises

With confidence in official data now under pressure, financial markets are forced to rely on signals that may themselves be politically vulnerable. Futures markets are pricing in a near-certain Federal Reserve rate cut in September, bolstered by the labor market deterioration and the intensifying trade policy backdrop. However, President Trump’s growing influence over Fed appointments, following a sudden resignation on the Board of Governors, has cast further doubt over the central bank’s ability to act independently.

The term “TACO trade” shorthand for "Trump Always Chickens Out" resurfaced in market chatter, referencing the recurring pattern of aggressive policy posturing followed by strategic retreats. Whether this dynamic will reappear in the face of mounting tariffs and economic weakness remains to be seen.

Berkshire Hathaway Earnings Fall, Tariffs Pose Broadening Risk

The market shakeup extended to corporate America. Berkshire Hathaway reported a 4 percent decline in second-quarter operating profit, down to $11.16 billion. The firm explicitly cited Trump’s tariff strategy as a risk to its portfolio companies, adding weight to concerns that trade tensions are set to take a broader toll on business sentiment and performance.

These fears are not isolated. With fresh tariffs taking effect on August 7, including a surprising 39 percent US levy on Swiss imports far higher than the expected 10 to 15 percent baseline global supply chains and investor forecasts are again being stress-tested.

August’s Historical Weakness Adds to Investor Caution

August is already known as the second weakest month for the S&P 500, based on long-term data from the Stock Trader’s Almanac. The month’s early turbulence, coupled with unresolved questions around AI sector earnings and the tariff timeline, suggests that volatility may persist. While upbeat corporate earnings from firms like Disney, Caterpillar, and McDonald’s may offer brief reprieve, structural uncertainties appear to be gaining the upper hand.

The cascading effects of a weak jobs report, executive-level interference with economic institutions, and swelling trade risks have combined to jolt financial markets and disrupt investor confidence. What began as a statistical revision has evolved into a broader challenge to policy credibility, raising questions not just about the direction of the US economy, but the transparency and independence of the institutions that monitor it. As investors await clarity from the Federal Reserve and further policy signals from the White House, the margin for error continues to narrow.

Source: CNBC

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Samantha Luan

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It was a very volatile week for financial markets. Things started off strong with a trade deal between the U.S. and Europe, but confidence dropped quickly after President Trump announced new global tariffs on August 1. Canada will now face a 35% tariff, up from 25%, and other countries could see tariffs as high as 41% starting August 7 unless new deals are made. This hurt investor sentiment and caused stock markets in Asia and Europe to fall.

The U.S. Federal Reserve decided to keep interest rates unchanged. Fed Chair Jerome Powell said they need more data before making any changes. The U.S. dollar rose earlier in the week thanks to strong GDP data. In Japan, the Bank of Japan also kept rates steady and raised its inflation outlook, but didn’t signal any rate hikes, which caused the yen to weaken. President Trump continued to pressure the Fed to lower interest rates.

On Friday, markets were shaken by much worse-than-expected U.S. jobs data. Fewer jobs were added than expected, and past numbers were revised lower. This increased chances of a Fed rate cut in September. The U.S. dollar dropped sharply, while gold jumped higher. Stocks, oil, and Bitcoin all fell, as investors grew more worried about global trade tensions and a slowing economy.

Markets This Week

U.S. Stocks

The Dow Jones fell every day last week after starting with a key reversal pattern—making a new high but closing lower on Monday. What began as normal profit-taking turned into heavier selling on Friday due to weaker-than-expected U.S. employment data and the announcement of new tariffs on multiple countries as trade talks continued. The drop appears slightly oversold in the short term, but the full impact of the jobs report and trade tensions is still uncertain. Volatility is likely to remain high this week, creating range-trading opportunities. Medium-term traders should be cautious about buying at current levels and may want to wait for further weakness or consider selling into any short-term rebound. Resistance levels are at 44,000, 44,500, and 45,000, while support lies at 43,000, 42,000, and 41,750.

Japanese Stocks

The Nikkei 225 gave up all of its gains from the July 23 U.S.–Japan trade deal last week, falling back to the key 40,000円 level. Although the Bank of Japan maintained a cautious stance on raising interest rates—causing the yen to weaken—the sharp drop in USD/JPY and U.S. equities on Friday pushed the Nikkei lower into the weekend. Despite the decline, the 10-day moving average remains in a bullish trend, and as long as the yen doesn’t strengthen further, a rebound this week is likely. Resistance is seen at 41,000円 and 42,000円, while support lies at 40,000円, 39,200円, and 39,000円.

USD/JPY

USD/JPY surged above 150 last week, raising concerns within the Japanese government as strong U.S. economic data and cautious comments from Fed Chair Powell on cutting rates supported the dollar. At the same time, the Bank of Japan signaled it still needs more time before raising rates, adding to the upward pressure. However, all gains were wiped out after much weaker-than-expected U.S. employment data triggered steady selling into the weekend. It’s unclear if this weak trend in U.S. data will continue, but with few major releases scheduled this week, USD/JPY is likely to trade sideways in a broad range. There is a risk of another sharp sell-off if negative headlines emerge around U.S. trade talks. Resistance is seen at 148, 149, and 150, while support lies at 147, 146, and 145.

Gold

Gold spent most of last week under pressure, testing the lower end of its recent range as a stronger U.S. dollar triggered steady selling. However, much weaker-than-expected U.S. employment data reversed the dollar’s strength and sparked heavy gold buying, pushing prices higher by the end of the week. Renewed trade tensions also supported demand for safe-haven assets, bringing buyers back into the market. While gold remains well supported on dips and trade risks are a positive factor, the short-term outlook is slightly overbought, suggesting some consolidation may occur. Resistance is at $3,400 and $3,450, with support at $3,300 and $3,250.

Crude Oil

Crude oil briefly moved above the $70 resistance level midweek after stronger-than-expected U.S. GDP data boosted expectations for oil demand. However, sentiment quickly shifted as President Trump announced increased tariffs on Canada and other countries, and weaker U.S. employment data triggered aggressive selling, pushing prices back toward the middle of the recent range. Ongoing tariff concerns may limit further upside, and with strong support holding around $65, range trading remains the most effective strategy for now. Resistance is seen at $70, $75, and $80, while support continues to hold at $65 and $60.

Bitcoin

Bitcoin dropped every day over the past five days, making it the worst 5-day stretch since June. Ongoing debate in the U.S. government about how to regulate crypto has created uncertainty, causing big investors to pull back. The Federal Reserve delaying interest rate cuts also hurt Bitcoin, since it tends to do better when rates are expected to fall. Selling picked up after President Trump announced new tariffs and weak U.S. jobs data added to market worries. In the short term, prices may fall further, but the market looks oversold, so short-term traders might find chances to buy if prices start to bounce. Medium-term investors may want to wait until there’s more clarity on U.S. trade policy and the economy. Resistance is at $120,000, $125,000, and $150,000, with support at $112,000, $110,000, and $105,000.

This Week’s Focus

● Monday: U.S. Factory Orders

● Tuesday: Japan Monetary Policy Meeting Minutes, Japan au Jibun Bank Services PMI, E.U. HCOB Eurozone Composite PMI, U.K. S&P Global Composite PMI, U.S. Trade Balance, U.S. S&P Global Services PMI, U.S. ISM Non-Manufacturing PMI

● Wednesday: U.K. S&P Global Construction PMI

● Thursday: Australia Building Approvals, Australia Trade Balance, U.K. BoE Interest Rate Decision, U.S. Jobless Claims

● Friday: Japan Household Spending, Japan Current Account

This week could bring more sharp market moves, even though the economic calendar is relatively light. The main scheduled event is the Bank of England meeting on Thursday, where a 0.25% rate cut is widely expected. PMI data from several major economies will also be released, offering clues about global growth. But the bigger focus will be on how markets react to last Friday’s sell-off—whether it signals the beginning of a new trend or was just a short-term move.

U.S. trade policy is likely to dominate sentiment, with President Trump continuing to pressure other countries to negotiate on his terms. Traders will be watching closely for any new headlines or developments on tariffs and trade deals. With uncertainty high and momentum shifting, this could be a volatile week as bulls and bears compete to set the next direction

Source: ACTIONFOREX

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Economic

Asia Mirrors Wall Street Decline as Jobs Data Stokes Recession Concerns

Asian financial markets opened the week under pressure, tracking Wall Street’s sharp decline on Friday after weak US employment figures rekindled fears of an economic slowdown. The July payrolls report, alongside substantial downward revisions to previous months, confirmed a labor market deceleration that forced investors to adjust expectations for future Federal Reserve actions. The Nikkei led regional losses, tumbling 2.1 percent, while South Korea’s main index slipped 0.2 percent. Despite the overall bearish sentiment, MSCI’s Asia-Pacific index outside Japan managed to inch up 0.3 percent, offering limited regional divergence.

The data highlighted a significant shift in momentum. Nonfarm payrolls were revised downward by 290,000 across May and June, and the three-month average for job creation has slowed drastically to just 35,000, compared to 231,000 earlier in the year. According to Goldman Sachs, these figures are now more aligned with broader growth indicators, both of which suggest the US economy is growing at a pace below potential.

Market Pricing Reflects Imminent Fed Easing

The poor labor data prompted a rapid recalibration in market expectations. Probability for a rate cut in September surged to 90 percent, up from just 40 percent before the report. Traders are now pricing in 65 basis points of rate cuts by the end of the year, nearly doubling the pre-report estimate of 33 basis points. Two-year US Treasury yields fell another four basis points on Monday to 3.661 percent, adding to Friday’s nearly 25 basis point plunge the sharpest single-day drop in almost a year.

Despite this downward pressure on yields, US equity futures showed marginal strength. S&P 500 futures rose 0.1 percent, and Nasdaq futures gained 0.2 percent, buoyed in part by an earnings season that continues to exceed expectations. Roughly two-thirds of S&P 500 companies have now reported, with 63 percent beating analyst forecasts and average earnings growth revised upward to 9.8 percent.

Dollar Weakens as Institutional Credibility Comes Under Scrutiny

The dollar's recent rally was interrupted by the labor market miss and political intervention in economic institutions. President Trump’s unexpected dismissal of Bureau of Labor Statistics Commissioner Erika McEntarfer on Friday, along with the opportunity to appoint a new Fed governor, has heightened investor unease over potential politicization of monetary policy.

The dollar index fell to 98.659, down from last week’s high of 100.250. The greenback lost significant ground against major currencies, falling 2.3 percent against the yen on Friday and slipping another 0.1 percent to 147.24 yen on Monday. The euro remained firm at $1.1585, while sterling traded at $1.3287 amid expectations that the Bank of England will cut rates by 25 basis points this week. However, internal divisions on the BoE board and future rate path uncertainties remain unresolved.

Commodities Struggle as Supply Increases and Sentiment Sours

Oil prices extended their decline as OPEC+ announced a significant production increase for September, reversing the group’s 2024 output cuts. Brent crude slipped 0.6 percent to $69.24 per barrel, while US West Texas Intermediate also dropped 0.6 percent to $66.93. The decision to restore supply at a time of fragile demand sentiment reflects a strategic push to maintain market share but may further suppress prices in the near term.

Gold prices were stable at $3,361 per ounce after a 2 percent surge on Friday, supported by growing uncertainty around monetary policy credibility and geopolitical volatility. However, upside momentum in the gold market may remain constrained by investor hesitancy amid ongoing shifts in interest rate expectations.

The confluence of weaker-than-expected US employment data, rising doubts over economic data integrity, and concerns about central bank independence has created renewed anxiety across global markets. Asian equities, commodities, and currency markets all responded with caution, reflecting a broader re-evaluation of near-term economic prospects and monetary policy direction. With September rate cuts now seen as almost certain, the focus will shift toward the pace and credibility of policy adjustments amid rising political pressures and slowing global demand.

Source: Reuters

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Dollar Attempts Recovery Amid Policy Uncertainty and Political Shock

Following a volatile end to last week, the US dollar managed a slight recovery on Monday, gaining 0.2 percent against a basket of currencies to reach 98.86. This modest rebound comes after a sharp decline on Friday, when the dollar plunged over 2 percent against the yen and 1.5 percent versus the euro. The sell-off was driven by disappointing July employment data and a dramatic political shake-up involving President Donald Trump’s dismissal of the Bureau of Labor Statistics (BLS) commissioner, Erika McEntarfer.

The labor market report revealed that job creation fell significantly short of expectations, while downward revisions to the previous two months erased a total of 258,000 jobs. These figures prompted a swift reassessment of monetary policy outlooks, with investors accelerating their expectations for Federal Reserve rate cuts.

Mounting Pressure on the Fed as September Cut Becomes Base Case

Investor sentiment turned sharply dovish, with markets now pricing in over a 95 percent probability that the Fed will initiate a rate cut at its September meeting. The implied path suggests over 63 basis points of easing by the end of 2025. The two-year Treasury yield dropped to a three-month low of 3.6590 percent, while the ten-year yield hovered near a one-month trough at 4.2060 percent. This yield movement reflects growing market conviction that the Fed will pivot toward supporting growth amid weakening employment signals.

Macquarie Group’s head of economics, David Doyle, announced a revision of the firm’s base case, moving forward its expected 25 basis point rate cut to September. While Doyle does not forecast a continued severe weakening in the labor market, he believes the magnitude of the July miss and prior revisions could shift the Fed's balance-of-risk evaluation.

Trump’s Intervention Fuels Volatility and Policy Risk

Adding to the market instability, President Trump’s decision to fire the head of the BLS cast a shadow over the credibility and independence of economic data reporting. The accusation that job numbers had been manipulated introduces an element of political risk that markets are finding difficult to quantify. Furthermore, the sudden resignation of Federal Reserve Governor Adriana Kugler grants Trump another opportunity to influence the Fed’s direction more directly, at a time when he has vocally criticized the central bank for delaying rate reductions.

While Trump’s actions appear to have deepened market expectations for near-term easing, they also contribute to broader uncertainty over institutional stability, particularly in how economic policy decisions will be shaped in the months ahead.

Currency Markets Reflect Shifting Risk Dynamics

The US dollar’s behavior against major currencies mirrored these evolving risks. Although it edged up slightly against the yen to 147.60, it remained nearly three yen lower than Friday’s peak. The euro slipped 0.2 percent to $1.1560, and the pound eased to $1.3263. Meanwhile, commodity-linked currencies like the Australian and New Zealand dollars also retreated slightly after strong Friday gains, driven by the earlier dollar weakness.

Elsewhere, the Swiss franc held steady at 0.8041 per dollar. However, the Swiss economy faced its own shock when the US administration imposed new tariffs, prompting warnings from industry groups that tens of thousands of jobs could be at risk. This additional layer of trade tension complicates the global macroeconomic landscape already strained by monetary policy shifts.

The dollar’s partial stabilization on Monday offered only limited relief following its steep fall. The combination of disappointing labor data, political interference in statistical agencies, and shifting expectations around Fed policy have created an environment of heightened volatility and uncertainty. While the markets have now solidified expectations for a September rate cut, the broader outlook for the dollar will remain sensitive to incoming economic data, political developments, and evolving central bank signals. The interplay of these factors underscores the fragility of investor confidence in a period marked by both institutional disruption and macroeconomic softening.

Source: Reuters

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Implementation Challenges Loom Over US-Japan Trade Agreement

Prime Minister Shigeru Ishiba has acknowledged growing concerns over the implementation of a trade agreement recently signed between Japan and the United States. While the deal, concluded just days after Ishiba's electoral setback in the upper house, was hailed as a diplomatic win delivering relatively favorable terms for Japan, the prime minister warned that translating its provisions into action could face substantial obstacles.

Speaking before parliament, Ishiba described the agreement as a "win-win" outcome but emphasized that enacting its clauses particularly those concerning automobile tariffs may present deeper complexities than initially anticipated. His remarks reflect both internal political pressure and skepticism surrounding the legal clarity and enforceability of the deal, which remains largely undocumented.

Absence of Formal Documentation Raises Legal and Political Doubts

Chief trade negotiator Ryosei Akazawa echoed concerns about the lack of written commitments, admitting that a formal document would have improved transparency and accountability. He further noted that similar deals the US struck with the EU and South Korea also lack signed texts, underscoring the informal nature of these recent trade arrangements. This absence of binding documentation raises uncertainties not only around enforcement but also about the permanence of concessions, especially with US tariffs potentially subject to executive discretion.

Washington has committed to imposing a lower-than-expected 15 percent general tariff on Japanese imports, instead of the initially threatened 25 percent. However, the critical issue of auto tariffs remains unresolved. Currently standing at 27.5 percent when including pre-existing rates, these levies continue to inflict pressure on Japan’s export-driven automotive sector, which contributes approximately 10 percent to national GDP.

Ishiba’s Political Future Tied to Tariff Outcomes

The trade deal follows a difficult political period for Ishiba, whose administration lost its majority in both chambers of parliament the first such occurrence for a ruling coalition in Japan in seven decades. His cabinet’s approval rating rose slightly to 36.8 percent following the deal, according to a JNN weekend poll. However, the Liberal Democratic Party’s support slipped to 20.4 percent, while the right-wing Sanseito party surged to 10.2 percent, overtaking other opposition parties.

In this context, Ishiba’s insistence on prioritizing automobile tariff reductions reflects both economic imperatives and political strategy. Securing a presidential order in the US to reduce or eliminate the tariffs has become a focal point of the administration’s trade agenda. This objective holds direct consequences for employment, exports, and broader industrial competitiveness.

Rising Living Costs and Policy Coordination

In addition to trade-related concerns, Ishiba faces mounting pressure to address the rising cost of living. Although his administration has proposed subsidies to assist households, he indicated that policy implementation will depend on cross-party negotiations, a process likely to be protracted given the government’s minority status.

The lack of a parliamentary majority complicates Ishiba’s ability to deliver on both foreign and domestic fronts. The government’s weakened legislative position introduces greater dependency on coalition-building and compromises, which may slow policy momentum or dilute reforms.

The US-Japan trade agreement has opened a path for improved bilateral economic relations, but its long-term success remains uncertain. While the announcement of reduced tariffs helped buoy Ishiba’s approval ratings and signaled diplomatic resilience, the absence of written guarantees, unresolved issues like auto duties, and Japan’s internal political instability collectively cloud the deal’s future. The coming months will test the administration’s capacity to translate a headline agreement into concrete economic gains under constrained political conditions.

Source: Bloomberg

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[Quick Facts]

1. OPEC+ reaches output increase agreement, reshaping global crude supply landscape.

2. U.S. consumers face the highest tariff since 1934.

3. Japanese PM says implementing Trade Deal with U.S. may be a greater challenge than reaching it.

4. Trump's firing of U.S. Labor Statistics Bureau Chief condemned as 'Baseless' and 'Preposterous'.

5. Patsalides: Eurozone resilient despite trade woes.

6. Nonfarm payrolls boost rate cut expectations, but fail to shift Powell's stance.

[News Details]

OPEC+ reaches output increase agreement, reshaping global crude supply landscape

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) reached a consensus via video conference on Sunday, deciding to accelerate the originally one-year production recovery plan by completing it in September this year, significantly boosting daily crude oil output by 548,000 barrels. This move will fully offset the 2.2 million barrels per day (bpd) production cuts implemented by eight member countries since 2023, with the UAE also receiving additional production quotas. Approximately 1.66 million bpd of shut-in capacity will be reassessed before the end of the year.

This decision marks a strategic shift for OPEC and its allies from maintaining oil prices to competing for market share. Despite current geopolitical tensions and strong seasonal demand, the production increase has effectively curbed crude oil and gasoline futures prices, bringing benefits to consumers while supporting U.S. President Trump's energy policies.

However, the move has also raised concerns about potential global crude supply oversupply in the second half of the year. The production increase decision confirms a preliminary agreement previously disclosed by Bloomberg. Notably, as OPEC+ made its decision, the Trump administration was intensifying pressure on Russia, threatening secondary sanctions on countries purchasing Russian oil unless the Ukraine conflict ends soon.

This diplomatic pressure interacts subtly with Trump's demand for lower oil prices, as he also seeks interest rate cuts from the Federal Reserve. Significantly, Russian Deputy Prime Minister Novak made a rare visit to Saudi Arabia on Thursday to discuss bilateral cooperation with Saudi Energy Minister Abdulaziz bin Salman. As the dominant forces in the OPEC+ alliance for nearly a decade, their interactions will continue to shape the global energy market.

U.S. consumers face the highest tariff since 1934

The latest research data from Yale University's Budget Lab shows that as of July 31st, the average effective tariff rate imposed by the U.S. on imported goods reached 18.3%, the highest level since 1934. The average effective tariff rate is not fixed but adjusts with changes in national policies, economic conditions, and the international trade environment.

The Budget Lab estimates that tariff policies will reduce U.S. real GDP growth by 0.5 percentage points annually in 2025 and 2026. Additionally, tariffs will push the U.S. unemployment rate up by 0.3 percentage points by the end of 2025 and 0.7 percentage points by the end of 2026. Furthermore, tariffs will increase average U.S. household expenditures by $2,400 in 2025, with particularly severe impacts on clothing. In the short term, consumers may see shoe prices rise by 40% and clothing prices by 38%. In the long run, shoe prices could increase by 19%, while clothing prices may rise by 17%.

Japanese PM says implementing Trade Deal with U.S. may be a greater challenge than reaching it

Japanese Prime Minister Shigeru Ishiba stated that the trade agreement reached between the U.S. and Japan last month is a win-win for both countries, but implementing its terms may prove more challenging than reaching the deal itself. Speaking in parliament on Monday in response to questions, Ishiba said some say implementing this trade agreement is harder than reaching it. He humbly seeks continued support. Japan's chief trade negotiator, Ryosei Akazawa, acknowledged criticism about the lack of written documentation during the same session, explaining that it would be very helpful if there were some paper documents. He added that similar agreements with the EU and South Korea in Washington currently lack written records. These remarks highlight the significant uncertainties surrounding a series of global trade deals. Washington agreed to impose a 15% across-the-board tariff on Japanese imports, lower than the previously threatened 25%. However, the fate of auto tariffs remains uncertain.

Trump's firing of U.S. Labor Statistics Bureau Chief condemned as 'Baseless' and 'Preposterous'

Trump's firing of the head of the U.S. Labor Statistics Bureau, Erika McEntarfer, on Sunday drew sharp criticism, with a former commissioner stating the move undermines the agency's credibility.

Last Friday, Trump dismissed McEntarfer, accusing her of bias and data manipulation, following the release of July's employment report, which fell far short of expectations. Trump provided no evidence of misconduct, and some private-sector economists said they saw no signs of bias in the data.

The U.S. Bureau of Labor Statistics (BLS) is generally regarded as a nonpartisan institution. On Sunday, William Beach, who preceded McEntarfer as BLS commissioner, told CNN's State of the Union that firing McEntarfer was baseless and that she could not have manipulated the data, as it was "locked" by numerous staff members before she saw it. Beach acknowledged significant revisions in the past two employment reports but argued that current labor statistics are more accurate than they were 30 years ago. " I don’t know that there's any grounds at all for this firing," he said. "And it really hurts the statistical system. It undermines credibility in BLS."

Former Treasury Secretary Larry Summers called Trump's move "Preposterous" and far worse than anything Nixon did. According to a transcript, Summers explained that this is a classic case of democracy giving way to authoritarianism. Firing statisticians is like threatening newspaper editors, attacking universities, or going after law firms defending clients the president doesn't like. It's appalling.

On Sunday, Trump told reporters he would announce a new statistician in the coming days and expressed no confidence in McEntarfer, calling the situation "a scam."

Patsalides: Eurozone resilient despite trade woes

European Central Bank Governing Council member Patsalides stated in an interview on Sunday that the eurozone is navigating current geopolitical challenges. Despite a difficult international environment, the eurozone economy has demonstrated resilience. However, the overall outlook remains uncertain, primarily due to ongoing trade tensions. Geopolitical risks, geostrategic instability, and trade wars have made policymakers more cautious in their forecasts, rendering the future highly unpredictable.

Nonfarm payrolls boost rate cut expectations, but fail to shift Powell's stance

The U.S. Labor Department reported on Friday that nonfarm payrolls added just 73,000 jobs in July, far below the expected 110,000 and marking a downward revision of 258,000 jobs for the previous two months. The three-month average job gain dropped to just 35,000, the lowest level since the pandemic, while the unemployment rate rose to 4.2% and the labor force participation rate fell by 0.2 percentage points, signaling a significant cooling in the labor market.

The data shattered market hopes for a U.S. economic "soft landing" and sparked renewed fears of a recession.

Following the report, market expectations for a Federal Reserve rate cut surged. The CME FedWatch Tool showed the probability of a 25-basis-point rate cut in September jumping from 45% to 75%, with the projected total rate cuts for the year revised upward from 64 basis points to 70 basis points.

However, the impact of Trump's immigration enforcement policies since May has been gradually intensifying, and deportations are expected to weigh heavily on nonfarm payroll gains, though with a relatively smaller effect on the unemployment rate. This divergence may explain the mismatch between the rise in unemployment and the weak job additions. Looking ahead, July's employment data may still be insufficient to alter Federal Reserve Chair Jerome Powell's relatively hawkish stance.

[Today's Focus]

UTC+8 14:30 Switzerland July CPI

UTC+8 22:00 U.S. June Factory Orders

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Citi Lifts Gold Forecast to $3,500 as US Outlook Darkens and Safe-Haven Demand Surges

Gold Poised for New Highs as Citi Revises Price Outlook Amid Mounting US Concerns

Tariffs and Weak Data Amplify Demand for Safe-Haven Assets

Institutional Credibility and Geopolitical Risk Feed into Price Revaluation

Robust Demand Fundamentals Underpin Structural Price Strength

Source: Reuters

Market Confidence Rattled by Jobs Data Fallout and Trump's Intervention in BLSSummary

Markets Recoil as Labor Data Revisions Unleash Political and Economic Shockwaves

Trump’s Firing of BLS Head Fuels Institutional Credibility Concerns

Rate Cut Expectations Accelerate, But Uncertainty Rises

Berkshire Hathaway Earnings Fall, Tariffs Pose Broadening Risk

August’s Historical Weakness Adds to Investor Caution

Source: CNBC

U.S. Jobs Data Shock Raises Concerns: New Market Trend Or Short-Term Volatility?

U.S. Stocks

Japanese Stocks

USD/JPY

Gold

Crude Oil

Bitcoin

Source: ACTIONFOREX

Asian Markets Slide as US Economic Fears Deepen, Oil Extends Losses

Asia Mirrors Wall Street Decline as Jobs Data Stokes Recession Concerns

Market Pricing Reflects Imminent Fed Easing

Dollar Weakens as Institutional Credibility Comes Under Scrutiny

Commodities Struggle as Supply Increases and Sentiment Sours

Source: Reuters

Dollar Stabilizes After Sharp Decline as Fed Rate Cut Bets Surge on Weak Jobs Data

Dollar Attempts Recovery Amid Policy Uncertainty and Political Shock

Mounting Pressure on the Fed as September Cut Becomes Base Case

Trump’s Intervention Fuels Volatility and Policy Risk

Currency Markets Reflect Shifting Risk Dynamics

Source: Reuters

Japan’s PM Warns of Implementation Hurdles in “Win-Win” US Trade Deal

Implementation Challenges Loom Over US-Japan Trade Agreement

Absence of Formal Documentation Raises Legal and Political Doubts

Ishiba’s Political Future Tied to Tariff Outcomes

Rising Living Costs and Policy Coordination

Source: Bloomberg

OPEC+ Reaches Output Increase Agreement; Nonfarm Payrolls Trigger Recession Fears

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