Important Events For The Week Ahead: Rate Decisions And NFP

Economic

Summary:

US President Donald Trump said trade talks with Canada are not a focus for his administration right now, and instead of negotiating a deal he may decide to just leave existing import taxes in place.

Clarification of the tariff situation allows markets to restore old ties and turn their attention to economic events. Yes, investors remain concerned about the potential US–EU trade agreement ahead of the August 1st deadline and ongoing negotiations between Washington and Beijing. However, the focus will shift to the packed economic calendar, which will take centre stage.

The releases of US GDP data for the second quarter and labour market data for July will be the highlights of the week, as will the FOMC meeting. Bloomberg experts do not expect a cut in the federal funds rate, but there may be two dissenters in the Fed. Christopher Waller and Michelle Bowman have made it clear that they are not opposed to an immediate rate cut.

After GDP fell into negative territory in the first quarter, Trading Economics expects the indicator to grow by 2.5% in the second quarter thanks to a recovery in net exports. It seems that the US economy is not going to fall off a cliff. However, slowing employment and rising unemployment could be warning signs of a slowdown. As a result, stock indices and the dollar are at risk of going on a roller coaster ride.

Source: FxPro

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Economic

Russia-Ukraine Conflict

Ukraine Seeks Major Defense Partnership with U.S.

In a bold announcement signaling Kyiv’s growing role as a defense manufacturer, Ukrainian President Volodymyr Zelensky stated that the country has reached a preliminary agreement with U.S. President Donald Trump for a prospective sale of Ukrainian unmanned systems worth between $10 and $30 billion. This declaration reflects a new strategic direction in Ukraine’s defense posture shifting from arms recipient to potential arms supplier.

Zelensky framed the arrangement as part of a broader “big deal” between Washington and Kyiv. In this proposed structure, Ukraine would sell domestically developed drones to the U.S. while simultaneously purchasing American-made weapons systems. This two-way agreement suggests a deepening interdependency in military logistics and signals Ukraine’s ambition to scale up its participation in the global arms economy.

Oversight by Ukraine’s National Security Leadership

To ensure compliance and transparency, oversight of the contracts will be coordinated by high-ranking Ukrainian officials, including Rustem Umerov, Secretary of the National Security and Defense Council; Defense Minister Denys Shmyhal; and presidential advisor Oleksandr Kamyshin. The composition of this supervisory group reflects the strategic weight Ukraine assigns to the agreement and its intent to institutionalize high-level accountability.

Since the beginning of its war with Russia in 2022, Ukraine has aggressively accelerated its development of unmanned systems across multiple domains air, land, and sea. These systems are not only deployed in national defense but are also now positioned as export commodities. A prominent goal for 2025 includes the production of 30,000 long-range drones, a dramatic scale-up that places Ukraine among the top contenders in drone manufacturing globally.

Kyiv is also negotiating arms co-production agreements with several European countries, including Denmark, Norway, and Germany, as part of its broader strategy to externalize manufacturing. According to Zelensky, an initial framework with Denmark has already been reached, reflecting confidence in international industrial partnerships.

Innovation in Weaponized Drone Technology

Ukraine’s emerging military technology includes hybrid systems that blur the line between drones and missiles. Notable prototypes such as the Palianytsia and Peklo (meaning “Hell”) have attracted interest for their high-precision, long-range capabilities. These drone-missile hybrids are positioned as cost-effective alternatives to conventional cruise missiles and have become symbols of Ukraine’s innovative adaptation under wartime pressure.

Their battlefield efficacy was recently demonstrated in the unprecedented “Spiderweb” operation in June, when Ukraine launched a complex drone strike deep into Russian territory, targeting four airbases. This attack was widely regarded as a technological and tactical breakthrough in asymmetrical warfare.

Implications for U.S.-Ukraine Strategic Alignment

The drone deal proposal suggests a shift in the U.S.-Ukraine defense dynamic. Rather than remaining solely a recipient of U.S. military aid, Ukraine is positioning itself as a high-value defense partner with advanced battlefield experience and indigenous technological capability. For the U.S., the deal may represent a means to supplement drone inventories and support an ally’s defense economy without overextending its own manufacturing capacity.

Furthermore, the transactional nature of the deal drones in exchange for U.S. arms may offer the Trump administration a more politically palatable path to maintaining support for Ukraine without direct financial outlays. This development marks a possible evolution in Western defense assistance, driven more by mutual defense-industrial benefit than purely security aid.

Ukraine’s potential $30 billion drone sale to the United States, if finalized, would mark a significant inflection point in the country’s military-industrial strategy. As Kyiv leverages battlefield-tested innovation, expanding export infrastructure, and strategic diplomacy, it aims to redefine its role within the global arms market. While the proposed deal is still in early stages, it signals a broader realignment of Ukraine’s defense identity from aid-dependent to co-equal supplier in global security architectures.

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Economic

Regulatory Scrutiny Intensifies as Fuel Supply Plunges

Russia’s Federal Antimonopoly Service (FAS) has opened a formal investigation into a petroleum division of Gazprom following a steep decline in fuel supplies to the domestic exchange market. The probe centers on suspicions that the company may have deliberately restricted sales of gasoline, specifically the widely used Ai-92 and Ai-95 grades, thereby fueling an artificial shortage during a period of peak seasonal demand.

Between May 20 and June 27, Gazprom’s sales of Ai-92 gasoline on the St. Petersburg International Mercantile Exchange dropped by 74%, while Ai-95 volumes declined by 50%. This coincided with the onset of the summer travel and harvest season a period traditionally marked by heightened transportation demand raising concerns of potential market manipulation.

Fuel Price Surge Raises Red Flags

The FAS has emphasized that such abrupt supply cuts in high-demand months risk undermining market stability and may constitute a breach of competition laws. The timing of the shortfall has intensified public backlash, as consumers face soaring fuel costs at the pump. This aligns with broader inflationary pressures in Russia, where fuel price hikes have emerged as a politically sensitive issue.

Russian regulators had already issued a formal warning to Gazprom on June 17, requesting justification for the volume reductions from two of its key production facilities in Surgut and Astrakhan. These sites are critical to domestic supply continuity. Authorities demanded an explanation within ten days, according to sources from RBC and Gazeta.ru.

Exchange-Based Pricing Under Strain

The current fuel pricing system in Russia, structured around transparent exchange-based mechanisms, is designed to ensure regular supply and prevent speculative distortions. This system relies heavily on consistent participation from major producers like Gazprom. A sudden withdrawal from the market by such players undermines pricing integrity and restricts liquidity, which can exacerbate inflationary dynamics.

In this context, the investigation into Gazprom serves not only as a regulatory response but also as a signal to the broader energy sector that no firm, regardless of its size or state affiliation, is exempt from obligations to stabilize the domestic market.

Kremlin Considers Export Restrictions

Facing mounting pressure, the Russian government is reportedly reviewing the option of imposing new restrictions on gasoline exports to prioritize local supply. This potential shift in policy reflects the dual challenge of maintaining price stability while balancing state revenue from fuel exports. With the harvest season approaching and summer transport demand rising, failure to act could further erode public confidence.

Economic commentators in Russian media have interpreted the investigation as more than just a technical enforcement action. Many view it as a calculated move to reassure the public while delivering a warning to major shareholders: the pursuit of export profits cannot come at the expense of domestic energy security.

The situation also underscores a broader tension within Russia’s economic model, where state-aligned enterprises must navigate the competing imperatives of global market competitiveness and domestic welfare assurance. In Gazprom’s case, its dual identity as a profit-driven entity and a quasi-public utility has drawn it into the center of this policy dilemma.

The unfolding investigation highlights a complex causal relationship between corporate supply strategies, regulatory enforcement, and inflation control in Russia’s fuel market. While the probe may yield short-term corrective measures, the longer-term solution likely hinges on structural reforms to ensure transparent and equitable distribution of critical resources. For now, Gazprom’s operations are under intense scrutiny, and the government’s next steps will be closely watched for their impact on both domestic consumers and international energy markets.

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Economic

EU Tightens Sanctions on Nayara Energy

In a move that underscores growing geopolitical energy tensions, the European Union has imposed new sanctions targeting Nayara Energy, one of India’s largest private refiners, due to its deep links with Russia through a 49.13% stake held by Rosneft. These measures include a prohibition on refined oil product exports originating from Russian crude, financial restrictions, shipping constraints, and a flexible price cap on Russian oil.

However, energy analysts, particularly from Norway-based consultancy Rystad Energy, forecast that the overall disruption to the global oil market will remain limited. India’s shift away from reliance on European buyers and its growing domestic energy demand have reduced its vulnerability to such sanctions.

India’s Strategic Flexibility Shields Its Oil Industry

India, currently refining 30–35% of its oil using discounted Russian crude, has been leveraging favorable pricing since sanctions on Moscow intensified following the Ukraine conflict. While Nayara Energy is in the direct line of EU sanctions, India’s state-run refiners, which dominate the sector and have no direct Russian ties, remain unaffected.

Nayara’s refinery at Vadinar, with a design capacity of 400,000 barrels per day, primarily produces diesel and jet fuel products heavily consumed both domestically and regionally. As European access tightens, Nayara is expected to pivot toward local consumption, utilizing its expansive retail network of 6,500 outlets across India. Simultaneously, new export channels are likely to be cultivated across the Middle East, Africa, and Southeast Asia.

Geopolitical Motives and Market Realignments

Beyond the EU’s legal rationale, the sanctions are part of a broader effort mirrored by U.S. tax threats on Russian oil importers to constrain Moscow’s energy outreach. As Rystad's Vice President of Oil Markets Pankaj Srivastava suggests, this pressure is strategically aimed not just at Russia but also at key energy consumers like India and China. Among them, China appears to retain more leverage due to its dominant position in the global energy negotiation landscape.

This shifting focus has placed Nayara under heightened scrutiny, as it represents a potential fault line in the balance of energy flows between the East and West.

Challenges in Tracing Crude Origin Complicate Compliance

A technical obstacle now facing Indian refiners is the complex process of verifying crude origin. The EU’s sanction framework prohibits any refined product derived from Russian crude, regardless of the location of processing. This places companies like Reliance Industries India’s other major private refiner not directly tied to Russia at risk of indirect repercussions.

Reliance, which operates one of the world’s largest refining complexes with a combined capacity of 1.2 million barrels per day in Jamnagar, may implement a “segregated operation model” to distinguish between Russian and non-Russian feedstock. This method would enable continued access to Western markets without breaching sanctions.

Short-Term Disruptions but Manageable Global Supply

While Nayara may face immediate export limitations, the global oil market is unlikely to experience significant strain. Rystad estimates that EU imports of medium distillates such as diesel could decline by around 230,000 barrels per day due to Nayara’s exit. Yet this shortfall is expected to be absorbed by the commencement of production at Nigeria’s massive Dangote refinery and anticipated output increases from OPEC+.

Moreover, India’s ability to adjust trade routes and its political commitment to energy autonomy mitigate the broader impact. Nayara’s shift to domestic sales and non-European markets also reduces the chance of a global price shock.

Implications More Severe for Russia’s Global Influence

Although India appears poised to weather the sanctions with strategic diversification, the long-term implications for Russia could be more consequential. The cumulative effect of Western sanctions, combined with potential shifts in Asian demand and the uncertain trajectory of peace negotiations, could constrain Moscow’s ability to sustain energy revenues and maintain its global supply routes.

Thus, while the direct market impact remains minimal, the geopolitical undercurrents signal an evolving energy landscape where access, origin, and political alignment increasingly dictate trade viability. The EU’s move may not shake oil prices significantly, but it recalibrates power dynamics in the international energy order.

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Devin

Economic

Central Bank

President Donald Trump on Friday expressed confidence the Federal Reserve will start lowering interest rates, a day after he met with central bank Chair Jerome Powell.

The president again indicated the meeting took a positive tone and believes the Fed is ready to provide the monetary policy easing he has been seeking for months.

"I think we had a very good meeting on interest rates. And [Powell] said to me ... very strongly, the country is doing well,'" Trump told reporters. "I got that to mean that I think he's going to start recommending lower rates."

Powell and his fellow policymakers have been reluctant to lower rates as they wait to see the impact that Trump's tariffs have on inflation. In fact, one argument Powell has made against cutting is that the economy is strong enough that it can withstand higher rates as officials watch how the data evolves.

Prior to Trump's remarks, White House budget director Russell Vought kept up the heat on the Fed's renovation project, pushing the case both for a review of the central bank while pressing for lower interest rates.

Vought echoed Trump's desire for the Fed to start easing monetary policy as a way to help the economy and specifically the housing market.

"There's a whole host of issues with regard to the Fed, and we want to make sure that those questions get answered over time," Vought said during the "Squawk Box" appearance. "This is not a pressure campaign on the Fed chairman."

The tone following Thursday's meeting was more conciliatory after months — and even years — of rancor between the Trump White House and the Powell Fed.

Both sides characterized the tour as positive, with a Fed official releasing a statement Friday saying the central bank was "honored" to welcome Trump as well as other Republican officials.

"We are grateful for the President's encouragement to complete this important project," the Fed spokesman said. "We remain committed to continuing to be careful stewards of these resources as we see the project through to completion."

Pressure to continue

Still, Vought said the White House plans to follow through on what Treasury Secretary Scott Bessent has deemed the need for a review of "the entire" Federal Reserve.

In addition to the issues over the building project and interest rates, officials also have criticized the Fed for the operational deficit it is running as interest rates have held high. The Fed in the past has remitted what it has earned from its investments back to the Treasury, but has been running a shortfall that totaled nearly $80 billion in 2024 as interest it pays on bank reserves has outstripped what it is realizing on investments.

"We're going to continue to articulate our policy concerns with regard to the Fed's management," Vought said. "You don't get to just be at the Fed and not have any criticism directed your way. That is not something that exists in the American political system."

During the Thursday meeting, Trump also expressed confidence that Powell and his colleagues will see things the president's way when it comes to rates.

"I believe that the chairman is going to do the right thing," Trump told reporters then. "I mean, it may be a little too late, as the expression goes, but I believe he's going to do the right thing."

Despite the previous rancor, Trump recently has backed off previous threats to try to fire the Fed chair, and he reiterated Thursday that he doesn't see the need for Powell to resign.

Futures markets are assigning virtually no chance for a rate cut when the Fed meets next week, with the next move not considered likely until September. Market pricing also is tilted towards the possibility of another cut before the end of the year.

Source: CNBC

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Jason

Economic

US President Donald Trump said trade talks with Canada are not a focus for his administration right now, and instead of negotiating a deal he may decide to just leave existing import taxes in place.

“We haven’t really had a lot of luck with Canada,” Trump told reporters Friday morning.

“I think Canada could be one where they’ll just pay tariffs, not really a negotiation,” he added. “We don’t have a deal with Canada. We haven’t been focused on that.”

The Canadian dollar had a muted reaction to the remarks, which were similar to previous comments by the president. The loonie was trading at C$1.3695 per US dollar as of 10:27 a.m. in New York.

The president’s statements come a day after Canadian officials held a series of meetings in Washington with Republican senators. Commerce Secretary Howard Lutnick also met Wednesday night with Dominic LeBlanc, the Canadian minister in charge of US trade.

Prime Minister Mark Carney has also lowered expectations recently of reaching a deal with Trump by Aug. 1, saying Canada won’t sign a bad agreement just to get one done.

Canadian officials are under less pressure to get a trade deal immediately because most products are currently exempt from US tariffs if they’re shipped under the rules of the US-Mexico-Canada Agreement, the pact Trump signed in his first term.

However, Trump has imposed steep new taxes on imports of Canadian steel, aluminum and autos, and Carney’s team has focused on trying to get those eliminated or reduced.

The US and Canada have one of the world’s largest bilateral trading relationships. The US imported about $477 billion of goods and services from Canada last year and exported $441 billion to Canada.

Source: Bloomberg Europe

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Political

Thailand Demands Sincerity Before Ceasefire Talks Progress

Tensions between Thailand and Cambodia have reached a critical juncture after consecutive days of cross-border shelling and airstrikes that caused casualties on both sides. Amid growing international concern, Cambodia has publicly proposed an immediate and unconditional ceasefire, prompting a guarded yet responsive stance from Thai authorities.

On July 25, during a closed session of the United Nations Security Council attended by representatives from both nations, Cambodian Ambassador Chhea Keo declared his government’s willingness to implement a ceasefire without preconditions. The statement followed two consecutive days of border violence, including artillery exchanges and aerial bombardments. Chhea Keo emphasized Cambodia’s preference for peaceful dispute resolution and aligned his message with the UN Security Council’s call for restraint and diplomacy. His remarks marked a strategic pivot from confrontation to conciliation, signaling Phnom Penh’s intent to internationalize the resolution process.

Thailand Calls for Authentic Diplomatic Commitment

Responding the next day, Thai Foreign Minister Maris Sangiampongsa stated that Cambodia must first show “genuine goodwill” if it is serious about ending the conflict and beginning talks. His remarks suggest a degree of skepticism toward Cambodia’s overture, implying that previous actions had undermined trust between the two nations. Thailand’s position does not outright reject negotiations but frames them as conditional upon evidence of sincerity and accountability.

Adding nuance to Thailand’s posture, foreign ministry spokesperson Nikorndej Balankura, speaking ahead of a United Nations meeting, affirmed that Bangkok remains open to initiating negotiations. He noted that Malaysia, the current rotating chair of ASEAN, could assist in mediating a resolution. This reveals Thailand’s preference for a multilateral framework within ASEAN rather than relying solely on UN channels, underlining the region’s internal diplomatic mechanisms.

Diplomatic Outlook: Ceasefire Hinges on Trust and Regional Mediation

The relationship between Cambodia’s public call for immediate peace and Thailand’s conditional openness to dialogue suggests more than just a correlation it points to a deeper trust deficit. While both countries publicly support a diplomatic path, Thailand’s insistence on verified goodwill implies a causal concern: without trust-building measures, ceasefire efforts risk being short-lived or symbolic.

In the coming days, the effectiveness of ASEAN, particularly Malaysia’s diplomatic engagement, may determine whether this tense standoff gives way to dialogue or drags into prolonged instability. As both nations face pressure from the UN and neighboring countries, the window for de-escalation remains open but fragile.

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