Trump Says He’s Not Focused On Talks With Canada, Tariffs Might Stay

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.

“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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Gerik

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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Devin

Economic

The dollar index (DXY00) today is up by +0.35%. The dollar is climbing today on comments made late Thursday from President Trump that firing Fed Chair Powell wasn't necessary, easing concerns around the Fed's independence that could spark foreign investors to shun dollar assets. Higher T-note yields today are also supportive of the dollar. On the negative side was today's report on US Jun capital goods new orders nondefense ex-aircraft & parts that unexpectedly declined.

US Jun capital goods new orders nondefense ex-aircraft & parts unexpectedly fell -0.7% m/m, weaker than expectations of a +0.1% m/m increase.

President Trump downplayed his clash with Fed Chair Powell, stating that there was "no tension" between them and that he simply wants to see interest rates lowered.

Federal funds futures prices are discounting the chances for a -25 bp rate cut at 3% at the July 29-30 FOMC meeting and 63% at the following meeting on September 16-17.

EUR/USD (^EURUSD) today is down by -0.13%. The euro is under pressure today from a stronger dollar. However, today's Eurozone economic news was supportive for the euro after the Eurozone's June M3 money supply rose less than expected and the German July IFO business confidence index rose to a 14-month high. Also, hawkish ECB comments were positive for the euro after ECB Governing Council member Kazaks said he saw little reason to lower interest rates further, and ECB Governing Council member and Bundesbank President Nagel stated that a steady monetary policy from the ECB is appropriate.

Eurozone Jun M3 money supply rose +.3% y/y, weaker than expectations of +3.7% y/y and the slowest pace of increase in 9 months.

The German Jul IFO business confidence index rose +0.2 to a 14-month high of 88.6, although weaker than expectations of 89.0.

ECB Governing Council member Kazaks said he saw little reason to lower interest rates further unless the economy suffers a major blow, and "There is value in the ECB holding interest rates at current levels and the time of no-brainer moves to hike or cut rates is over."

ECB Governing Council member and Bundesbank President Nagel said a steady monetary policy from the ECB is appropriate because the inflation outlook has remained unchanged and the economic outlook has improved slightly.

Source: Yahoo Finance

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Gerik

Slowing Momentum in Global Rate Cuts

Central banks from the world's ten largest economies are entering a transitional phase in their monetary policy approaches. The widespread easing cycle observed throughout 2024 and early 2025 appears to be decelerating. For those that acted early, the end of policy accommodation may be near. Others, grappling with persistent inflationary pressure, are adopting a wait-and-see stance. Political uncertainty, particularly in the United States where President Trump has publicly criticized Federal Reserve Chair Jerome Powell, adds a further layer of complexity to monetary policymaking.

Switzerland: Currency Intervention Over Aggressive Rate Action

Despite speculation that the Swiss National Bank (SNB) would reintroduce negative interest rates to contain the franc’s surge, it maintained its benchmark rate at 0% in June 2025. Market participants currently estimate a 75% probability of a rate cut in September. Meanwhile, signs point to possible currency market interventions aimed at weakening the franc, highlighting a preference for targeted actions over broad monetary shifts.

Canada: Trade Uncertainty Limits Policy Flexibility

The Bank of Canada (BoC) is expected to hold its policy rate at 2.75% at its July 30 meeting. A combination of U.S. tariff tensions, weakening economic growth, and elevated inflation has produced a mixed macroeconomic signal. The BoC had previously cut rates by 225 basis points over nine months ending April 2025. However, consumer behavior volatility and trade disruptions are prompting a cautious pause, reflecting a potential causal link between external shocks and monetary inertia.

Sweden: Bold Easing with Room for More

Sweden's Riksbank executed a rate cut from 2.25% to 2% in June 2025, adding to a total of 200 basis points in reductions since May 2024. Meeting minutes suggest further cuts are possible if inflation remains subdued or if economic activity disappoints. This forward guidance establishes a clear causal pathway between weak growth and potential additional easing.

New Zealand: Waiting for Inflation Signals

The Reserve Bank of New Zealand (RBNZ) held its rate steady in July but signaled a bias toward further cuts if disinflation trends persist. Since August 2024, RBNZ has cut rates by 225 basis points. The current posture reflects a contingent relationship, as future moves depend heavily on inflation data aligning with forecasts.

Eurozone: Policy Pause with Trade and Currency Watch

The European Central Bank (ECB) paused its rate-cutting cycle on July 24 after delivering eight reductions in a year. The main rate stands at 2%, down from 4%. With inflation returning to the ECB's 2% target, the central bank is evaluating whether another 25 basis point cut is warranted by year-end. However, this decision is likely to hinge on the direction of euro appreciation and the outcome of EU-US trade talks, demonstrating an interaction between external economic diplomacy and internal price stability.

United States: Politics Versus Inflation

The Federal Reserve is expected to hold rates steady at its upcoming meeting, resisting political pressure for cuts from President Trump. Markets assign a 50% probability of a 25 basis point cut in September. That probability was previously higher but has diminished following data showing a 2.7% annual rise in inflation in June 2025. This reversal underlines the tension between political interference and macroeconomic fundamentals in shaping U.S. monetary policy.

United Kingdom: Balancing Inflation Surprises and Labor Trends

The Bank of England (BoE) is scheduled to meet on August 7. Despite a recent inflation spike and stable labor conditions, markets are pricing in a 25 basis point cut, with another likely by year-end. BoE has adopted a more cautious stance compared to peers, suggesting that persistent inflation acts as a limiting factor, even in the face of slowing economic momentum.

Australia: Data-Driven Deliberation

In a rare split decision earlier this month, the Reserve Bank of Australia (RBA) held its rate at 3.85%, pending further inflation data. Governor Michele Bullock emphasized that the debate centered on timing rather than direction. If inflation continues to decline, markets expect at least two additional cuts of 25 basis points before year-end. The RBA's position reflects a conditional correlation between inflation trends and monetary accommodation.

Norway: Conservative Moves After a Long Pause

Norges Bank reduced its key rate by 25 basis points to 4.25% in June 2025, marking its first cut since 2020. Norway remains one of the most cautious developed-market central banks. The most recent data, showing core inflation at 3.1%, justifies this reserved approach and suggests a causal association between inflation stability and restrained easing.

Japan: Poised for Future Tightening

Japan remains the only major economy still navigating a rate-hiking cycle. The Bank of Japan (BoJ) has struggled with uncertainty stemming from U.S. tariffs and domestic political turmoil. However, a recent trade agreement with the U.S. has revived expectations for renewed tightening. Governor Shinichi Uchida indicated that Japan may soon reach conditions necessary for sustained inflation above 2%, which would justify future rate hikes. This perspective underscores a cause-and-effect sequence between trade clarity, inflation targets, and tightening readiness.

A World of Diverging Paths

Global monetary policy is no longer moving in a synchronized direction. While many central banks have slowed or halted rate cuts due to waning inflation, external shocks, and geopolitical considerations, others like Japan are still preparing for eventual tightening. In this fragmented environment, central banks are navigating complex domestic conditions and international headwinds. The resulting divergence in interest rate strategies reveals a deeper dependency on real-time data, policy credibility, and the growing weight of political pressure in shaping monetary trajectories.

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Devin

Commodity

Inflows into global equity funds picked up again in the week through July 23 as optimism over U.S. trade deals, stronger than expected U.S. economic reports and an encouraging start to the corporate earnings season boosted risk sentiment.

Global investors snapped up a net US$8.71 billion worth of equity funds during the week, reversing a US$4.4 billion net withdrawal in the prior week, data from LSEG Lipper showed.

The United States and Japan agreed a deal earlier this week which cut existing import tariffs on Japanese goods to a lower-than-threatened 15 per cent. Investors were also hopeful about the prospects of the U.S. and the European Union settling on U.S. import tariffs of around 15 per cent.

Investors took comfort from encouraging initial earnings reports as advanced AI chip maker TSMC posted a record profit and Gatorade owner PepsiCo upgraded its earnings forecasts.

Net European equity fund inflows reached an 11-week high of US$8.79 billion, while Asian funds drew a net US$1.17 billion. U.S. equity funds lagged, although net outflows eased to US$2.68 billion from about US$11.67 billion the prior week.

The technology sector gained US$1.61 billion, reversing the previous week’s US$576 million net outflow. The financial and industrial sectors also saw US$1.13 billion and US$1.61 billion net additions, respectively.

Net purchases of global bond funds extended into a 14th week as they added US$17.94 billion.

Investors pumped US$4.14 billion into short-term bond funds, the largest amount in 13 weeks. Euro-denominated bond funds and high-yield funds attracted a net US$3.89 billion and US$2.51 billion, respectively.

Gold and precious metals commodity funds recorded a net US$1.9 billion worth of purchases, the largest weekly figure since June 18.

Global money market funds drew a net US$2.09 billion after about US$21.78 billion of net sales a week ago.

Emerging markets saw a revival in buying interest with investors adding bond funds of US$2.19 billion and equity funds of US$250 million after net disposals of US$1.14 billion and US$155 million in the prior week, data for a combined 29,669 funds showed.

Source: BNN BIoomberg

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Damon

Economic

The United States may not reach a negotiated trade deal with Canada, U.S. President Donald Trump said on Friday, suggesting his administration could set a tariff rate unilaterally.

Trump, speaking to reporters as he left the White House for a trip to Scotland, said, "We haven't really had a lot of luck with Canada. I think Canada could be one where there's just a tariff, not really a negotiation."

The two nations are trying to work out a trade deal before August 1, when Washington is threatening to impose 35% tariffs on all Canadian goods not covered by the U.S.-Mexico-Canada trade agreement.

Carney's office did not immediately respond to a request for comment. Canadian officials have increasingly made clear that the chances of a deal by August 1 are unlikely.

Dominic LeBlanc, the federal cabinet minister in charge of U.S.-Canada trade, told reporters in Washington on Thursday after two days of talks that "we've made progress, but we have a lot of work in front of us."

LeBlanc said Canada would take the time necessary to get the best deal possible.

Carney indicated last week that Canada might not be able to persuade the United States to lift all its sanctions.

Source: Yahoo Finance

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Thomas

Political

In what may prove to be a major milestone in the history of the Israel-Palestine conflict, France will recognize Palestine as an independent state at the September United Nations General Assembly, President Emmanuel Macron announced late Thursday. While a majority of European countries and an overwhelming majority of the world's countries already recognize Palestine, France is significant in that it's a permanent member of the UN Security Council, and thus holds veto power. Fellow permanent members China and Russia recognize Palestine, while the UK and United States do not.

Shaded in green, 147 of 193 UN member states -- and most European countries -- recognize Palestine (via Al Jazeera)

"Consistent with its historic commitment to a just and lasting peace in the Middle East, I have decided that France will recognize the State of Palestine," Macron said in an announcement posted to X that included a letter from Macron to Palestinian Authority President Mahmoud Abbas. He also reiterated his support for the "demilitarization of Hamas," and said Palestine must accept "its demilitarization and fully recogniz[e] Israel." However, his statement didn't convey that his September recognition would hinge on those factors.

Macron's surprise announcement prompted immediate condemnation from Israel and the United States, starting with Israeli Prime Minister Benjamin Netanyahu:

"We strongly condemn President Macron’s decision to recognize a Palestinian state next to Tel Aviv in the wake of the October 7 massacre. Such a move rewards terror and risks creating another Iranian proxy, just as Gaza became. A Palestinian state in these conditions would be a launch pad to annihilate Israel — not to live in peace beside it. Let’s be clear: the Palestinians do not seek a state alongside Israel; they seek a state instead of Israel."

Netanyahu's grievance that recognition of a Palestinian state "rewards terror" is enormously hypocritical. After all, recognition of the State of Israel came after years of terror attacks perpetrated by Zionists against not only Palestinians but British people as well. These attacks included truck- and car-bombings, massacres, and the poisoning of wells with biological agents.

The 1946 Zionist terror-bombing of Jerusalem's King David Hotel killed 91 people. It was the brainchild of future Israeli Prime Minister Menachem Begin. (via Haaretz)

Relations between Israel and France were already strained. In May, after Macron called on fellow European countries to take a less accommodating stance toward Israel's war in Gaza if the humanitarian crisis continued, Netanyahu accused him of leading "a crusade against the Jewish state." In his May remarks that triggered Netanyahu, Macron told fellow European leaders that "if we abandon Gaza...we will kill our credibility," and said recognition of a Palestinian state -- with conditions attached -- was "not only a moral duty, but a political necessity."

Mr. Macron, like a growing number of world leaders, has been exasperated by Mr. Netanyahu’s refusal to end the war despite the fact that Gaza has largely been reduced to rubble and tens of thousands of its inhabitants killed. Mr. Netanyahu’s refusal to offer any plan for the future governance, security and reconstruction of Gaza after the fighting stops has also incensed the French president and other international leaders. - New York Times

Earlier this week, amid reporting of growing hunger in Gaza, and as the number of Palestinians killed at aid distribution points exceeded 1,000, French Foreign Minister Jean-Noël Barrot called on Israel to finally let foreign press into Gaza, "to show what is happening there and to bear witness."

US Secretary of State Marco Rubio joined Netanyahu in denouncing Macron, but the social media reaction was overwhelmingly against him:

Palestinian ambassador to France Hala Abou-Hassira commended Macron's announcement of pending state recognition, saying it served notice to Israel and the United States that “One cannot continue to impose facts on the ground, facts that render a two-state solution impossible.” Many people believe the facts on the ground have already destroyed the possibility of a viable, contiguous Palestinian state. For example, the West Bank is positively riddled with Israeli settlements, and the settlers' violent campaign to intimidate Muslim and Christian Palestinians into abandoning their homes has significantly escalated following the Oct 7 Hamas invasion of Israel.

Meanwhile, while engaging in Gaza ceasefire talks with questionable sincerity, the Netanyahu government seems bent on significantly depopulating the territory. In addition to killing almost 60,000 residents, the IDF has systematically rendered most of the territory uninhabitable, and Netanyahu is pushing for other countries to accept Palestinians who want to "voluntarily" emigrate after all two million residents are herded into the southernmost end of the strip. Finance Minister Bezalel Smotrich is among many members of Netanyahu's government who've called for Israeli control of Gaza and the establishment of Jewish settlements there. Speaking this week to a Knesset conference titled “The Gaza Riviera – From Vision to Reality," Smotrich -- one of the most powerful officials in Israel -- said, "We will occupy Gaza and make it an inseparable part of the State of Israel.”

For decades, Israeli leaders gave lip-service to the idea of a two-state solution, while the settlement project steadily destroyed the viability of the concept. If nothing else, Smotrich and other members of Netanyahu's extremist government can be lauded for their refreshing candor.