Eurozone Manufacturing Shows First Signs of Stabilisation as Factory Orders Halt Long Decline

The International Monetary Fund (IMF) has reduced its growth forecast for the Swiss economy to 1.3% for 2025, down from its previous projection of 1.7%.

In its latest report released on Tuesday, the IMF cited worsening geopolitical tensions and tariffs as factors negatively affecting economic performance in Switzerland.

The IMF also provided its first outlook for 2026, projecting Swiss economic growth of 1.2%. Both forecasts fall below Switzerland’s long-term average growth rate of 1.8%.

These figures have been adjusted to account for the impact of sporting events, which can distort economic data due to broadcast income received by Swiss-based organizations such as FIFA and the International Olympic Committee.

The IMF’s downward revisions follow similar forecast cuts by the Swiss government and the Swiss National Bank.

"With global headwinds, growth is projected to remain somewhat below potential in 2025-26," the IMF stated in its report.

Source: Investing

EU Seeks Strategic Balance Under Looming U.S. Tariff Regime

Automotive, Steel, and Aluminum Sectors at the Heart of Talks

Negotiation Strategy Focuses on Interim Compromise

Markets React to Progress, But Asymmetry Remains a Concern

Contingency Planning: The EU’s Retaliatory Arsenal

Source: Reuters

The U.S. dollar retreated further Tuesday, falling to multi-year lows on growing expectations of interest rate cuts, while President Donald Trump’s spending bill stoked fiscal worries.

At 04:25 ET (08:25 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, dropped 0.2% to 96.275, dropping to its lowest level since February 2022.

Dollar under pressure

The U.S. currency has fallen to multi-year lows, pressured by increasing expectations that the Federal Reserve will cut interest rates in the coming months, optimism of upcoming trade deals, as well as political sparring over a sweeping tax and spending cut bill.

“The dollar continues to grind lower in a move probably now best categorised as an orderly dollar bear trend. After a structurally driven decline of the dollar in April, its losses over the last month or so have become cyclical, as earlier Fed easing becomes priced,” said analysts at ING, in a note.

Expectations of easing from the U.S. central bank are growing, particularly as U.S. President Donald Trump continues to urge the Fed to ease monetary policy, sending Fed Chair Jerome Powell a list of central bank interest rates around the world adorned with handwritten commentary saying the U.S. rate should be between Japan’s 0.5% and Denmark’s 1.75%.

Trump’s constant tirade against the Fed and Powell has fuelled investor worries about the central bank’s independence and its credibility, weighing on the dollar.

Investors are also grappling with uncertainty over the U.S. Senate’s efforts to pass Trump’s tax-cut and spending bill, which faces internal party divisions over its projected $3.3 trillion addition to the national debt.

“Back to the short term, the dollar has come quite far already and this bear trend probably needs feeding with some macro news. That news comes today in the form of the June ISM manufacturing release and the JOLTS data,” ING added.

Euro just off four-year high

In Europe, EUR/USD slipped 0.1% to 1.1781, just below its previously hit four-year high of 1.1808.

The single currency surged 13.8% in the January-June period, its strongest-ever first half performance, LSEG data showed.

Traders are waiting for the latest preliminary inflation data from the eurozone, which is expected to have hit 2% in the year to June, which would be in line with the European Central Bank’s target.

Earlier this month, the ECB cut rates for the eighth time in a year but indicated it would likely pause at its next meeting, citing uncertainty linked to trade tensions with the United States.

Manufacturing purchasing managers indexes data for France, Germany, and eurozone for June are also due for release later in the session, and investors will also study comments from central bank chiefs at the European Central Bank forum in Sintra, Portugal.

GBP/USD gained 0.3% to 1.3764, not far from the three-and-a-half-year high it touched last week.

British house prices fell by 0.8% in June, a sharper fall than forecast and the biggest monthly decline in more than two years, data from mortgage lender Nationwide showed on Tuesday.

“Sterling could also face some political risk as Prime Minister Keir Starmer faces a backbench revolt over welfare reforms. The government has already been forced to make about £4bn of concessions to get the bill through – although its passage is not guaranteed. Any failure to get the bill through could hit sterling and gilts on the view that further concessions will have to be made at a time when there is no fiscal headroom,” ING added.

Japanese yen helped by safe-haven demand

In Asia, USD/JPY traded 0.7% lower to 143.06, with the Japanese currency benefitting from safe-haven demand after President Trump lashed out against Tokyo for alleged unwillingness to buy American-grown rice, while also hinting at ending trade talks with Tokyo.

Japanese officials signaled on Tuesday that they were still pushing for a tariff agreement with the U.S., but would not compromise the country’s agricultural industry for a deal.

USD/CNY slipped marginally lower to 7.1624, close to its strongest level since November following some upbeat purchasing managers index data this week.

Caixin PMI data on Tuesday showed China’s manufacturing sector rose back into expansion territory in June, as local manufacturers benefited from Washington and Beijing agreeing to temporarily slash their respective trade tariffs.

Source: Investing

The Prime Minister of Thailand, Paetongtarn Shinawatra, was suspended by the country's constitutional court on Tuesday pending an investigation into a leaked phone call with a senior Cambodian politician.

The judges voted 7 to 2 to suspend the 38-year-old prime minister after accepting a petition from 36 senators accusing her of dishonesty and a breach of ethical standards.

Why has Thailand's prime minister been suspended?

Paetongtarn has faced growing dissatisfaction over her handling of a border dispute with neighboring Cambodia, which saw a Cambodian soldier killed in a violent clash in May.

During a leaked June 15 phone call with Cambodian Senate President Hun Sen, Paetongtarn appeared to criticize an outspoken Thai army commander — considered a red line in a country where the military has significant clout.

Despite apologizing and insisting that her remarks were a negotiating tactic, thousands of conservative, nationalist-leaning protesters rallied in central Bangkok on Saturday to demand the prime minister's resignation.

"I only thought about what to do to avoid troubles, what to do to avoid armed confrontation, for the soldiers not to suffer any loss," she said. "I wouldn't be able to accept it if I said something with the other leader that could lead to negative consequences."

Paetongtarn first has 15 days in which to provide evidence to the constitutional court to support her defense, in which time Deputy Prime Minister Suriya Juangroongruangkit is expected to become acting prime minister.

"Government work doesn't stop, there is no problem," Tourism Minister and Pheu Thai Party Secretary-General Sorawong Thienthong told the Reuters news agency. "Suriya will become caretaker prime minister."

Thai government under pressure

However, the government has been left with only a wafer-thin majority after Paetongtarn's leaked call saw a key party abandon her coalition and threaten a no-confidence vote.

Earlier on Tuesday, King Maha Vajiralongkorn endorsed cabinet reshuffle which should have seen Paetongtarn assume the position of culture minister in addition to prime minister. But it's unclear if she will be able to be sworn into the role during her suspension.

She said on Monday that she would accept and follow the process but she didn't want to see her work interrupted.

It's not the first time that Paetongtarn has faced allegations over ethics breaches; she is currently also under investigation by Thailand's Office of the National Anti-Corruption Commission in a separate case.

The Constitutional Court last year removed her predecessor over a breach of ethics while her father, the influential former Prime Minister Thaksin Shinawatra, was deposed in a military coup in 2006.

Also on Tuesday, a spokeswoman for the Chinese Foreign Ministry insisted that would not comment on an "internal" Thai affair but said: "As a friendly neighbor, we hope that Thailand will maintain stability and development."

Source: DW

Euro zone inflation edged up last month to the European Central Bank's 2% target, confirming that the era of runaway prices is over and shifting policymaker focus to trade war-induced economic volatility.

Inflation in the 20 nations sharing the euro currency crept up to 2.0% in June from 1.9% a month earlier, in line with expectations in a Reuters poll of economists, as energy and industrial goods continued to pull down prices, offsetting quick services inflation.

Underlying inflation, a closely watched measure that excludes volatile food and fuel prices, meanwhile held steady at 2.3%, in line with expectations.

Anticipating this fall, the ECB has lowered interest rates from record highs by two full percentage points over the last year, and debate has turned to whether it needs to ease policy further to prevent inflation becoming too low given weak growth.

The development in services costs, which have been stubbornly high for years, is pivotal as it has raised fears that domestic inflation could get stuck above 2%.

Last month, services inflation edged up to 3.3% from 3.2%, as prices rose 0.7% on the month, supporting the argument of policy hawks that domestic inflation remains uncomfortably high, reducing the risk of undershooting.

Financial investors expect one more ECB rate cut to 1.75% towards the end of the year, then anticipate a period of steady rates before possible increases towards the end of 2026.

The outlook, however, is complicated by the fact that it depends on the outcome of a trade dispute between the EU and the U.S. President Donald Trump's administration.

For now, the conflict has reduced price pressures because it has sapped economic confidence, pushing up the value of the euro and lowering energy prices.

Indeed, the euro zone's economy is barely growing, with full-year expansion expected at less than 1%, as industry struggles after a multi-year recession, with private consumption weak and investment low.

If U.S. trade barriers stay, the EU is likely to retaliate and that is bound to be inflationary. Firms will then start rearranging value chains, which would add to increased production expenses.

Once the cost of the green transition and the ageing of the working age population are factored in, then prices could come under more sustained upward pressure, economists say.

Source: Yahoo Finance

Source: Reuters