Euro Climbs, Dollar Rebounds as Trump Delays EU Tariff Decision to July 9

Economic

Forex

Summary:

The euro and dollar gained against safe-haven currencies on Monday after U.S. President Donald Trump postponed his proposed 50% tariff on EU goods. Investors welcomed the delay as a sign of potential compromise...

Market Relief as Trump Offers More Time for EU Deal

Currency markets responded positively to President Donald Trump’s Sunday announcement that he would delay the imposition of a 50% tariff on European Union imports until July 9. The move, which followed a call with European Commission President Ursula von der Leyen, reversed a threat issued just two days earlier and provided markets with temporary relief.

The euro rose 0.3% to 162.60 yen and 0.2% against the dollar to $1.1382, its highest since April 30. The dollar, which had dropped 1% against the yen on Friday, rebounded 0.4% to 143.085 yen as investors interpreted the delay as a reduction in immediate geopolitical risk.

Temporary Calm, Persistent Volatility

Trump’s swift reversal underscores the volatility inherent in current U.S. trade policy. The July 9 deadline aligns with the expiration of the 90-day reprieve on tariffs issued during his “Liberation Day” announcement, adding a sense of urgency to U.S.-EU trade negotiations.

Ray Attrill, head of FX research at National Australia Bank, noted, “Markets have probably taken the view — and probably rightly so — that where we land eventually on a tariff situation between the U.S. and the EU is not going to be at 50%, but how we get there is frankly anybody’s guess at the moment.”

Despite this temporary calm, investors remain wary. The prospect of a 25% tariff on iPhones manufactured outside the U.S. is still on the table, continuing to weigh on tech sentiment.

Pro-Growth Currencies Hold Steady Amid Trade De-Escalation

Risk-sensitive currencies also showed resilience. The Australian dollar edged up to $0.6505, its strongest level since May 7, while the British pound held firm at $1.3535, just shy of Friday’s high. These gains reflected improved risk appetite, though analysts warned that any renewed deterioration in global growth expectations could reverse this momentum.

Attrill cautioned that “if global growth expectations are going to suffer a renewed setback here, that’s not good news for pro-cyclical, pro-growth currencies such as the Aussie dollar.”

Fiscal Concerns Still Linger

Even as trade tensions eased slightly, markets remain unsettled by the looming fiscal impact of Trump’s expansive tax and spending bill. The Congressional Budget Office estimates that the House version of the legislation would add approximately $3.8 trillion to the federal debt over the next decade.

Trump acknowledged the political resistance, hinting at "significant" changes expected in the Senate. Still, the implications of ballooning federal debt and uncertainty around policy implementation continue to cast a shadow over investor sentiment.

Trump’s decision to grant the EU more time has reassured currency markets for now, lifting the euro and supporting the dollar. However, with a July 9 deadline looming and threats like iPhone tariffs unresolved, the broader market narrative remains dominated by caution. While optimism over potential trade deals persists, the volatility of U.S. policy shifts ensures that market reactions will stay sensitive and reactive in the weeks ahead.

Source: Reuters

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Economic

From Room to Reality: The Strategic Promise of FOL 49%

Vietnam’s latest reform—Decree 69/2025/NĐ-CP—marks a turning point in its banking sector's integration with global capital markets. HDBank, MBBank, and VPBank, three commercial banks actively participating in restructuring weaker institutions, are now allowed to raise their foreign ownership limit to 49%. This policy opens the possibility for large-scale strategic investments, offering these banks preferential access to credit growth and liquidity support from the State Bank of Vietnam (SBV).

Yet, not every bank can capitalize equally. Vietcombank, for example, is excluded from the current FOL expansion due to its state ownership status, though it pursues alternative capital strategies via stake sales, including a 6.5% offering to Mizuho.

Credit Growth Pressures Require Capital Reinforcement

Aggressive credit expansion in 2024—27% for HDBank, 24% for MBBank, and 20% for VPBank—has outpaced the industry average of 14%, but also stretched capital adequacy ratios (CAR). If no equity is raised in the next two years, VIS Ratings estimates that the CAR of these banks could shrink by 150–300 basis points. With current CARs of 13.1% (HDB), 12.5% (MBB), and 11.8% (VPB), the urgency for new capital is clear—particularly when benchmarked against Vietcombank’s 16.1%.

Strategic equity inflows could solve this. Not only do they provide immediate capital buffers, but they also enable higher credit expansion, maintain compliance with Basel norms, and prepare banks for global financial scrutiny under IFRS.

Beyond Capital: Strategic Benefits of Foreign Partnerships

Strategic foreign investors bring more than capital. They contribute governance standards, risk management expertise, and access to syndicated funding. VPBank’s 2023 stake sale to SMBC exemplifies this synergy. The deal raised CAR by 2 percentage points and catalyzed a 3x surge in FDI enterprise lending. By May 2025, VPBank further secured a $1 billion syndicated loan for sustainable financing, arranged by SMBC and other global lenders.

Similar dynamics were observed at TPBank (partnered with SBI Holdings), VietinBank (MUFG), and Vietcombank (Mizuho), each seeing CAR improvements between 2–4 percentage points post-deal.

Structural Barriers: Not All Banks Are Ready

Despite regulatory clarity, readiness varies. MBBank has yet to signal a foreign investor strategy, preferring retained earnings and subordinated bond issuance—effective but lacking transformational impact.

VIS Ratings underscores the complexity of attracting strategic investors. Regulatory hurdles, international audit compliance, IFRS alignment, minority protection, and cross-ownership regulations make such deals lengthy and rigorous. Banks must commit to internal reform, transparency, and digital transformation to gain long-term investor confidence.

The Central Bank’s Role in Enabling Confidence

The SBV plays a pivotal role. A stable, transparent legal framework is critical for foreign capital retention. Clear M&A procedures, protective minority rights, and macro-prudential stability are essential to transform policy potential into actionable investment flows.

As Vietnam’s banks aim to deepen international integration, the FOL expansion presents a one-time opportunity—but only those with robust governance and credible reform strategies will capture it.

Raising the foreign ownership limit to 49% is not an end but a beginning. It offers Vietnamese banks an unprecedented chance to shore up capital, improve governance, and globalize their operations. However, in today’s competitive capital environment, access alone isn’t enough. Execution matters. Only banks that combine policy opportunity with strategic readiness will successfully unlock the billion-dollar wave of foreign capital the policy promises.

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China–U.S. Trade War

Trump Grants EU Tariff Reprieve Until July 9: Strategic Pause or Tactical Bluff?

In a calculated move that signals a potential pause in the mounting U.S.-EU trade tensions, President Donald Trump announced on Sunday that he has agreed to delay a proposed 50% tariff on EU goods until July 9, 2025. The decision followed a call from European Commission President Ursula von der Leyen, who requested an extension to allow time for further negotiations. Trump framed the concession as a personal privilege, posting on Truth Social: “It was my privilege to do so.”

Von der Leyen, confirming the exchange, described the call as “good” and emphasized that Europe is ready to “advance talks swiftly and decisively.” She highlighted the strategic importance of the transatlantic trade partnership, calling it the world’s “most consequential and close.”

Tariffs as Pressure, Not Policy

This move is Trump’s latest use of tariffs as geopolitical leverage. After previously imposing 20% reciprocal tariffs on the EU and lowering them to 10% for 90 days starting April 9, he floated a sharp escalation to 50% starting June 1 — now temporarily shelved. Trump justified the suggestion by labeling EU negotiations as “going nowhere,” describing the bloc as “very difficult to deal with.”

Yet, despite these rhetorical volleys, Trump’s willingness to delay the tariffs hints that his administration sees value in continued dialogue. It also reflects the possibility that the tariff threat was designed more as a bargaining chip than a firm economic measure.

Markets Digest Delay Cautiously

While the announcement brought temporary relief, financial markets remained measured in their response. Investors have grown accustomed to Trump’s trade posturing and now interpret many of his tariff threats as part of a broader negotiation strategy rather than immediate policy shifts.

Still, lingering uncertainty remains. Trump’s tone — particularly his statement that “it’s time that we play the game the way I know how to play” — suggests he’s prepared to follow through if no progress is made. The EU, for its part, is seeking to avoid further disruptions that could impact its export-heavy economies, especially in sectors like autos, technology, and luxury goods.

A Temporary Window for Diplomacy

The July 9 deadline now looms as a pivotal moment in U.S.-EU economic relations. If no “good deal” materializes by then, both sides could face a full-fledged tariff battle with significant consequences for global trade flows and investor sentiment.

The EU has prepared contingency responses, including retaliatory measures on up to €95 billion in U.S. exports, as previously reported. Still, the bloc appears committed to exhausting diplomatic avenues first.

For Trump, the delay offers him a narrative of strength and flexibility — maintaining pressure while appearing open to negotiation. For von der Leyen and EU leaders, it’s a critical opportunity to de-escalate tensions that have simmered since Trump’s return to office.

Trump’s deferral of the EU tariffs to July 9 buys time but doesn’t resolve underlying trade disputes. Whether this is a brief reprieve or the start of genuine compromise remains to be seen. With both political and economic stakes high, what happens over the next six weeks could reshape transatlantic trade for years to come.

Source: CNBC

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China–U.S. Trade War

Diminished Shock: Why Investors Are Less Reactive to Trump’s Tariff Threats

Despite President Trump’s latest warning of 50% import tariffs on European Union goods, investor behavior reflects increasing skepticism toward the immediacy and seriousness of these declarations. On Sunday, Trump announced a postponement of the proposed duties until July 9 — a softening that followed his original “recommendation” to begin implementation on June 1. The market’s tempered response underscores a growing belief that such threats are more performative than prescriptive.

The S&P 500, Dow Jones Industrial Average, and Nasdaq Composite each declined by less than 1% on Friday — a far cry from the 4%+ market plunge on April 4, when Trump initially floated his “reciprocal tariffs.” Similarly, Europe’s Stoxx 600 fell only 0.93%, suggesting that equity investors have begun to adjust their risk models around the president’s unpredictability.

Tariffs as Leverage, Not Policy

Barclays and other analysts have framed the proposed 50% tariffs as a negotiation ploy rather than a finalized directive. The language used by Trump — notably his preference for terms like “recommendation” — implies a tactical posture aimed at pressuring the EU in trade talks rather than establishing an enforceable economic regime.

Moreover, the White House itself has clarified that Trump’s posts are not always reflective of formal policy. This ambiguity, paired with Trump’s history of delaying or reversing such tariffs, has conditioned investors to temper their reactions.

Capital Markets Monitor Broader Risks

While tariffs dominated headlines, the broader market retreat last week was more directly linked to surging U.S. Treasury yields, a response to Trump’s new tax bill projected to add $2.3 trillion to the federal deficit. The fiscal expansion has renewed concerns about long-term debt sustainability, overshadowing short-term tariff noise in bond markets.

Furthermore, Trump's approval of the $14.9 billion U.S. Steel–Nippon Steel merger — a reversal of President Biden’s earlier block — highlights his willingness to override traditional national security objections in favor of economic stimulus. The deal is expected to add $14 billion to U.S. GDP and create 70,000 jobs, reinforcing his “America First” industrial platform even as it raises questions about regulatory consistency.

Apple, AI, and Strategic Workarounds

The tariff risk to global tech giants like Apple remains real. Trump reiterated that iPhones manufactured abroad could be subject to 25% tariffs, a cost that analysts estimate would directly raise U.S. retail prices by the same margin if production isn't localized. However, Apple is expected to absorb these costs rather than undertake the immense capital burden of reshoring manufacturing.

Meanwhile, companies are increasingly turning to AI tools to buffer against tariff volatility. Salesforce introduced an AI-powered customs compliance agent capable of recalibrating trade operations across 20,000 product categories in real-time. This move reflects a growing trend of using intelligent systems to monitor global value chains, automate tariff responses, and ensure supply chain agility.

As Zack Kass, a futurist and former OpenAI executive, aptly put it, “uncertainty from the U.S. tariff measures probably presents AI’s moment to shine.” The technological response to geopolitical unpredictability is becoming not only a buffer but a strategic advantage.

Source: CNBC

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Isaac Bennett

France and Vietnam are set to sign dozens of deals on Monday when French President Emmanuel Macron meets Vietnamese leaders in Hanoi as he seeks to increase France's influence in the former colony, which faces threats of high U.S. tariffs.

In his first formal visit to the country, and the first for a French president in nearly a decade, Macron will be accompanied by more than a dozen business executives, said an official with knowledge of the matter, and is expected to oversee the signing of possibly 30 agreements while trying to boost cooperation in multiple sectors, including aviation, nuclear energy, railways, renewables, research, satellites and defence.

Macron's long-planned trip to Vietnam, the first leg of a larger Southeast Asian tour including Indonesia and Singapore, comes on the heels of U.S. President Donald Trump's threats on Friday to impose 50% duties on EU goods from June, critically escalating trade tensions with the 27-country bloc.

As export-dependent Vietnam is also under pressure from Washington to buy more American goods to avoid 46% duties, European officials before Macron's visit have told the country to be careful in its concessions to the White House, two officials based in Vietnam with knowledge of the discussions told Reuters.

In talks with the United States, "Vietnam should make sure not to make decisions at the expense of European interests," one of the officials said, noting Vietnamese leaders had been told this could jeopardise close relations with the EU, which has a free trade deal with Vietnam and is a major buyer of its goods.

It is not clear whether Macron will emphasise that message on Monday as that may depend on the deals France will strike.

AIRBUS

There could be progress on a deal between Vietnam's low-cost airline VietJet (VJC.HM), opens new tab and European planemaker Airbus (AIR.PA), opens new tab, two sources familiar with the discussions said. That would follow a provisional agreement signed last year for the delivery of 20 A330neo wide-body airliners.

"We don't comment on discussions we may or may not be having with airlines," an Airbus spokesperson said.

Macron's Elysee presidential office had previously confirmed dozens of deals were expected, but did not respond to a request for comment on planes and Macron's messaging about U.S. concessions.

Vietnam's foreign ministry and VietJet did not reply to requests for comment.

Talks on satellites, including from Airbus, are also at an advanced stage, officials have said.

Vietnam, whose economy is heavily dependent on exports to the U.S., has made multiple pledges in trade talks with Washington to avoid tariffs that could undermine its growth model.

One frequently flagged offer has been the possible purchase of at least 250 Boeing (BA.N), opens new tab planes by flag carrier Vietnam Airlines (HVN.HM), opens new tab and rival VietJet, which Vietnamese and U.S. officials have said would help reduce the country's huge trade surplus with the U.S. and possibly appease Trump.

European officials are worried Airbus (AIR.PA), opens new tab may lose out from these possible deals, said three sources with knowledge of the concerns.

The planemaker is the main supplier of jets to Vietnam, with its aircraft making up 86% of the planes currently operated by Vietnamese airlines, according to data from Cirium, an aviation analytics company.

Reporting by Francesco Guarascio; Additional reporting by Tim Hepher, Lisa Barrington, Elizabeth Pineau and Sudip Kar-Gupta; Editing by Christian Schmollinger

Source: Reuters

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Thomas

Southeast Asian leaders start two days of talks from Monday, seeking to deepen ties with China and Gulf nations, and mitigate the fallout from US President Donald Trump’s tariff hikes.

Trade and economic cooperation will likely dominate the agenda of the 10-nation Association of Southeast Asian Nations summit taking place in Kuala Lumpur, along with conflicts in Gaza and Myanmar.

While the first of the two Asean summits held annually is usually reserved for Southeast Asian leaders, China is sending its No. 2 official, Premier Li Qiang. The leaders of the Gulf Cooperation Council nations, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates will also be in attendance. By contrast, the US and other Western nations won’t be represented.

For Malaysian Prime Minister Anwar Ibrahim, the summit he’s hosting is a chance to foster trade ties at a time nations with large surpluses with the US are on the hunt for new investment opportunities abroad. China is warning partners to avoid any deal with the US that comes at Beijing’s expense, leaving Asean members to walk a delicate balance between the world’s two top economies.

“There is no substitute for the United States,” said Shahriman Lockman, an analyst at the Institute of Strategic and International Studies in Malaysia. “Yes, we talk about diversification and autonomy. But let’s not kid ourselves — there is no real alternative in sight.”

Trade between China and Asean nations reached $982.3 billion last year, according to a report by state-run Xinhua News Agency. By comparison, US goods trade with the region totaled $476.8 billion in 2024 — $352.3 billion of which were American imports from the region, official data shows.

The summit comes weeks after Chinese President Xi Jinping visited Vietnam, Malaysia and Cambodia, during which he pitched for a unified “Asian family” — an apparent effort to counter US pressure on nations to limit trade ties with Beijing.

The Asean members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

New partners

Indonesia became a full member of the Russia and China-led BRICS group of developing nations earlier this year, with Malaysia, Vietnam and Thailand given partner nation status. Last week, Asean and China concluded talks to upgrade a free trade pact that includes chapters on digital and green economies and small and medium-sized enterprises, according to Chinese state media.

“I see this as a very good opportunity for us to show that Malaysia is a neutral country that wants to trade with any country that would like to trade with us,” Malaysian Communications Minister Fahmi Fadzil told reporters of the summit.

Back in Washington, negotiators from several countries in the region are working on deals to avert some of the highest tariff hikes announced last month by Trump. Whether those efforts will pan out are unclear and the US rejected a Malaysia-led attempt to negotiate as a bloc, according to local reports.

Southeast Asia has also engaged in a spate of intra-regional visits to facilitate business closer to home, although that won’t likely come close to filling the gap left by the US if it doesn’t drop levies.

“These are encouraging, but it doesn’t mean that the trouble is over,” Singapore Deputy Prime Minister Gan Kim Yong said this month. He added that Asean is negotiating to upgrade an existing trade agreement that could facilitate lower levies even though more than 90% of goods traded in the region are already tariff-free.

Conflicts abroad

Beyond trade, regional leaders are expected to have sessions ahead of the summit to discuss the ongoing civil war in military-ruled Myanmar. Anwar has also used recent trips abroad to warn of a widening chasm in the global north-south economic divide and criticize Israel’s backers over its war with Hamas in Gaza.

He told reporters last week he would “probably touch on” the subject in a bid to push for a ceasefire. Whether any other substantive outcomes are reached, meanwhile, remains to be seen.

“Despite rhetoric from the Malaysian government as chair, there has been very little evidence of an Asean effort here,” said Gregory Poling, a director and senior fellow at the Center for Strategic and International Studies. “The stakes are actually pretty low.”

Source: Theedgemarkets

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James Riley

Shares of Japan’s Nippon Steel Corp (TYO:5401) jumped on Monday after U.S. President Donald Trump expressed support for the company’s $14.9 billion bid to acquire U.S. Steel (NYSE:X).

In a post on Truth Social on Friday, Trump described the proposed acquisition as a “planned partnership” that would create jobs and bolster the American economy.

Reuters reported last week that Nippon Steel has committed to investing $14 billion in U.S. Steel’s operations if the merger is approved, with up to $4 billion allocated for building a new steel mill.

Tokyo-listed shares of Nippon Steel climbed as much as 7.4% in early trading. As of 00:36 GMT, the stock was trading 4.6% higher at 3,000 yen, its highest level since April 2.

Following Trump’s endorsement, U.S. Steel shares soared 21% on Friday, as investors interpreted the statement as a sign of presidential approval for the long-contested deal.

The acquisition, announced in December 2023, had faced opposition over national security concerns, leading to a block by former President Joe Biden. However, Trump’s recent directive for the Committee on Foreign Investment in the United States (CFIUS) to re-examine the deal has reignited hopes.

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