France’s Prime Minister Resigns As Macron Considers Replacement

Israel launched an attack on the leadership of Hamas in Qatar on Tuesday, expanding its military actions that have ranged across the Middle East to include the Gulf Arab state where the Palestinian Islamist group has long had its political base.

An Israeli official confirmed to Reuters that Israel had carried out an attack on Hamas leaders in Qatar. Qatar's Al Jazeera television, citing a Hamas source, said the attack targeted Hamas Gaza ceasefire negotiators.

Several blasts were heard in Qatar's Doha on Tuesday, Reuters witnesses said.

Plumes of black smoke were billowing from the city's Legtifya petrol station. Right next door to the petrol station is a small residential compound that has been guarded by Qatar’s emiri guard 24 hours a day since the beginning of the Gaza conflict.

Israel media, citing a senior Israeli official, said the attack was aimed at top Hamas leaders including Khalil al-Hayya, its exiled Gaza chief and top negotiator.

Qatar, which has been mediating between Hamas and Israel, condemned the "cowardly" Israeli attack on Hamas officials and called it a flagrant violation of international law.

Source: Reuters

US job growth was far less robust in the year through March than previously reported, adding to mounting pressure on the Federal Reserve to lower interest rates.

The number of workers on payrolls will likely be revised down by 911,000 for the 12 months through March — or nearly 76,000 less each month on average — according to the government’s preliminary benchmark revision out Tuesday. The final figures are due early next year.

Before the report, the government’s payrolls data indicated employers added nearly 1.8 million total jobs in the year through March on a non-seasonally adjusted basis, or an average of 149,000 per month.

The Bureau of Labor Statistics adjustment indicates the labor market slowdown in recent months followed an extended period of more moderate job growth that may lay the groundwork for a series of interest-rate cuts beginning next week. Fed Chair Jerome Powell recently acknowledged risks to the job market have increased, and two of his colleagues preferred to lower borrowing costs in July.

Traders widely expect central bankers to cut rates at the conclusion of their two-day meeting Sept. 17.

While benchmark revisions are carried out every year, they’ve garnered added attention this year with investors and Fed watchers looking for any signs that the labor market may be slowing faster than previously thought. The adjustments have also spilled into politics, where President Donald Trump has previously lambasted revisions to jobs data.

Source: Bloomberg Europe

U.S. President Donald Trump has upended the traditional global trading environment, in some cases even undermining free trade agreements with partners in favor of bilateral deals that appear to be light on details but heavy on symbolism.Since April, a pattern has emerged. Countries that strike trade deals with the U.S. often announce large orders for Boeing jets.For example, during South Korean President Lee Jae Myung's visit to Washington, Korean Air announced an order for 103 Boeing aircraft valued at $36.2 billion. That order, combined with another $13.7 billion deal with GE Aerospace is reportedly the largest deal in the airline's history.

As part of its deal, Japan also placed an order for 100 Boeing jets, although the value of the order was not disclosed. Even smaller economies such as Malaysia, Indonesia, and Cambodia have included Boeing purchases in their trade agreements.Even the UK placed a $10 billion order for Boeing aircraft as part of its trade deal with the U.S. in May, according to Treasury Secretary Howard Lutnick. Days later, British Airways' parent IAG announced an order for 32 Boeing jets on May 9, totaling $12.7 billion.

Why aircraft — and why Boeing?

Why is Boeing such a fixture in Trump's deals? The first reason: it looks good for the president.John Grant, founder of aviation consultancy Midas Aviation told CNBC that "[the] simple answer is that planes are high profile and Trump always wants profile.""Aircraft are very visible statements of trade and have a high value, making them particularly attractive in such agreements between countries," he added.

Wendy Cutler, Vice President at the Asia Society Policy Institute, noted that these high-value deals allow countries to demonstrate their commitment to reducing bilateral trade surpluses with the U.S — the reason Trump gave to invoke emergency powers for imposing tariffs.Aircraft orders also come with several other advantages. Unlike commodities such as steel or rice, planes are less likely to ruffle any feathers when it comes to domestic industries."Imports of these airplanes are not politically difficult for most trading partners of the U.S., unlike metals or agricultural imports," said Homin Lee, senior macro strategist at Lombard Odier.

Japan, for example, has long protected its rice industry, while South Korea is a major steel exporter to the U.S. — making reciprocal purchases of American steel impractical. Seoul was the fourth-largest exporter of steel to the U.S. in 2024, according to the International Trade Administration under the U.S. Commerce Department.Moreover, aircraft orders typically span years. Boeing's production backlog stands at 11.5 years, according to market research firm Forecast International, while Airbus trails slightly at 10.6 years.This long delivery window means that airlines from countries entering into deals with Trump can announce purchases without any immediate financial strain.

But its not all performative.

The international tourism industry is on an upswing, and U.S. made passenger aircraft are the ideal item to include in any trade deal with Trump, said Lombard Odier's Lee. "They're actually needed."According to the International Air Transport Association, global airline net profits are projected to reach $36 billion in 2025, up from $32.4 billion in 2024, with profit margins rising to 3.7%. Total revenue is expected to hit a record $979 billion, up 1.3% from last year.

Beyond economics, Boeing carries symbolic weight. "It's an iconic American company," said Cutler. And with the aircraft manufacturing industry effectively a duopoly between Boeing and Airbus, options are limited.Boeing figures in Trump's deals despite safety scandals including a door panel blowout on an Alaska Airlines flight in 2024.Whistleblower allegations and production quality concerns have dogged the company, but Grant noted that Boeing has introduced improvements that airlines are beginning to see firsthand.

Source: CNBC

If we go back to the year 2015, Thailand was in the midst of a major export boom, running a current account surplus of $28 billion. The following year the surplus jumped to $43 billion. Thailand maintained these large current account surpluses, anchored by exports of agriculture, manufactured goods, and services, right up until the COVID-19 pandemic.

As I have previously noted, an economy based around exports like Thailand’s is especially vulnerable to external shocks that disrupt normal patterns of travel and commerce, like pandemics or trade wars. Even now, Thailand is struggling with a slow recovery in exports that has contributed to the country’s weak economic growth. In 2024, the current account surplus was $11 billion, which is fine for many countries but maybe not ideal for Thailand.

We could explain this by saying that today’s global economy is not very friendly for countries that depend on external demand, so of course Thailand is struggling. Any export-led economy would be. But there is a puzzle here, because there is another country in the same region that is achieving rapid economic growth through export-led industrialization, just as Thailand did. And this country is seeing its exports and current account surplus rise, despite the pandemic and trade tensions. This country, of course, is Vietnam.

In 2015, Vietnam was running a deficit in its current account of negative $2 billion. According to the Atlas of Economic Complexity, Vietnam’s total exports that year were $181 billion, $94 billion less than Thailand. Within a couple years, the roles had switched. In 2023, Vietnam exported over $400 billion in goods and services, surpassing Thailand’s $345 billion. Vietnam ran a $28 billion surplus in its current account in 2024, and the economy is experiencing steady growth despite global economic headwinds.

Even in tourism, where Thailand has reigned supreme for many years, Vietnam is catching up. While Thailand still leads in absolute numbers, inbound travel remains below its pre-pandemic peak and it looks like arrivals will be lower this year than they were last year. Vietnam, on the other hand, is poised to set new records for inbound tourists this year.

I want to be clear that a surplus in the current account does not mean one economy is performing better than another. Whether a country runs a surplus or deficit is less important than why. In this case both Vietnam and Thailand have built their economies around similar models of export-led industrialization with the explicit goal of exporting surplus production, so comparing them can provide useful insights.

Foreign investors like to offshore their manufacturing to Vietnam and Thailand to take advantage of lower production costs. The goods they produce are then exported to global markets. Exports are a major goal of this type of development so a surplus in the current account is evidence that the model is working. That’s why it is interesting that Vietnam seems to be overtaking Thailand at a time of heightened geopolitical uncertainty and weakening global demand. Why might this be the case?

Part of the answer could be that it’s cheaper to make things in Vietnam. Due in large part to the success of its export-led industrialization strategy, Thailand has a higher per capita GDP than Vietnam. This means basic manufacturing inputs like wages and electricity are likely to be costlier due to Thailand’s relatively higher level of development.

Another consideration is the composition of exports. Back in 2015, Vietnam’s primary exports were divided between electronics, textiles, and agriculture. By 2023, exports had overwhelmingly shifted toward higher-value products such as phones, integrated circuits, and computers. This is typical with export-led industrialization as countries move away from lower value-added goods like agriculture and textiles, and toward more valuable goods.

In Vietnam, textiles and agriculture fell from 38 percent of exports in 2015 to 28 percent by 2023, as the country shifted toward more advanced manufactures. In particular, Vietnam is seeing a big boom in the electronics industry, exporting $165 billion of electronic goods in 2023, equal to 41 percent of total exports. By comparison, Thailand exported $48 billion worth of electronics in the same year.

Vietnam also benefits from close proximity to large nearby markets like China and South Korea. A lot of demand for Vietnamese electronics comes from those two countries, as firms like LG, Samsung, and Xiaomi have invested billions setting up factories with an eye toward exports. This has trickled down to service exports as well. A little under half of Vietnam’s 17.5 million inbound tourists last year were from South Korea and China.

Thailand’s exports are more evenly spread across a range of goods and services including electronics, machinery, agriculture, tourism, chemicals and vehicles. While this should provide a more stable industrial base, I think it also makes Thailand more exposed to a general weakening of global demand. Lack of political stability can also reduce investor confidence, so Thailand is doing itself no favors with its revolving door of prime ministers.

When we look at these two cases we see that Vietnam has been very successful as shifting from agriculture and textiles toward a narrower specialization in electronics which is a good business to be in right now. This, along with lower costs, a strategic location and a stable political environment, can help explain why Vietnam is catching up to Thailand so quickly in the export-led industrialization game. The next question for a future column is whether this is sufficient to sustain such a high rate of growth over the long-term and in an increasingly uncertain global economy.

Source: The Diplomat

Source: Euronews

Yen rebounded broadly today, climbing to the top of the performance leaderboard as traders latched onto speculation that the BoJ may still raise rates as soon as October. A Bloomberg report citing unnamed officials suggested some policymakers favor an earlier move, with reduced concern about growth risks following the U.S.–Japan trade deal. The report noted that the key variable for policymakers is whether the drag from U.S. tariffs on Japan’s economy remains within expectations. If so, the bank could argue there is room to resume normalizing rates despite political turbulence in Tokyo.

However, the report relied on anonymous sources and came alongside conflicting headlines. Many analysts argue the resignation of Prime Minister Shigeru Ishiba and the ensuing LDP leadership contest are reasons for caution. The BoJ, they contend, is unlikely to risk tightening policy amid such political uncertainty. The central bank also has time on its side. Policymakers can afford to wait until early next year for the next hike, ensuring stability while avoiding the impression of acting in haste. For markets, this means rate expectations are likely to remain volatile as headlines shift.

Elsewhere, Euro weakened broadly, with investors still digesting the ouster of French Prime Minister François Bayrou on Monday. His government’s collapse has heightened perceptions of instability in Paris, though the turmoil alone is unlikely to drive sustained Euro weakness without broader contagion. Still, the picture of France cycling through four prime ministers in two years have weighed on confidence. With President Emmanuel Macron scrambling to find another candidate capable of surviving parliament, Euro has remained defensive.

In the wider FX market, Yen is the day’s strongest performer so far, followed by Aussie and Kiwi. Euro is the weakest, trailed by the Swiss Franc and Loonie. Dollar and Sterling sit mid-pack.

In Europe, at the time of writing, FTSE is up 0.26%. DAX is down -0.48%. CAC is up 0.31%. UK 10-year yield is up 0.012 at 4.62. Germany 10-year yield is up 0.029 at 2.674. Earlier in Asia, Nikkei fell -0.42%. Hong Kong HSI rose 1.19%. China Shanghai SSE fell -0.51%. Singapore Strait Times fell -0.25%. Japan 10-year JGB yield fell -0.03 to 1.565.

Westpac: Australia consumer optimism elusive, RBA to pause in September

Australia’s Westpac Consumer Sentiment Index dropped -3.1% mom to 95.4 in September, reversing part of last month’s boost from the RBA’s third rate cut. While sentiment remains modestly above July levels and well above the April tariff-driven low, the index has slipped back into “cautiously pessimistic” territory. Westpac said outright optimism remains “elusive”, with households still uneasy about the path ahead despite relief from the cost-of-living crisis.

The RBA is expected to keep its cash rate steady at 3.6% when it meets later this month. Westpac noted recent data on inflation and demand came in “somewhat firmer than expected”, reinforcing the case for caution. Policymakers are seen waiting for further confirmation that underlying trends remain benign before resuming cuts.

For now, consumer recovery looks sluggish, and Westpac expects “further easing will likely be needed” to sustain momentum. It forecasts another 25bp cut in November and two additional moves in 2026, underscoring the gradual path ahead for both sentiment and policy.

Australia NAB business survey: Confidence falls, costs ease, capacity still tight

Australia’s NAB Business Confidence index slipped from 8 to 4 in August, but conditions showed improvement, rising from 5 to 7. Trading remained steady at 12, while profitability rose from 2 to 4 and employment from 2 to 5. NAB Chief Economist Sally Auld said the results support the view that “the outlook for businesses continues to improve,” with both confidence and conditions now near long-run averages.

Capacity utilisation rose to 83.1% from 82.5%, staying two percentage points above its long-run norm. Capital expenditure intentions also improved, climbing from 8 to 10. Together, these suggest firms are still operating at high levels of resource use despite broader uncertainties.

At the same time, cost pressures eased further. Purchase cost growth slowed from 1.3% to 1.1%, its lowest since 2021, while labour costs moderated to from 1.9% 1.5% and product price growth dipped to from 0.8% 0.6%. The survey points to an environment of resilient business activity and capacity tightness, but with inflation pressures continuing to recede.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 147.05; (P) 147.82; (R1) 148.29;

EUR/JPY’s break of 146.65 support suggest that fall from 150.90 is resuming. Intraday bias is back on the downside, and break of 146.20 will target 100% projection of 150.90 to 146.20 from 149.12 at 144.42. Also, sustained trading below 55 D EMA (now at 147.15) will argue that whole rebound from 139.87 has completed with three waves up to 150.90. On the upside, however, break of 147.51 minor resistance will mix up the outlook again and turn intraday bias neutral.

In the bigger picture, price actions from 161.94 (2024 high) are seen as a corrective pattern to rise from 102.58 (2021 low). Decisive break of 61.8% retracement of 158.86 to 139.87 at 151.22 will argue that it has already completed with three waves at 139.87. Larger up trend might then be ready to resume through 161.94 high. In case the corrective pattern extends with another fall, strong support is expected from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound.

Source: ACTIONFOREX