While U.S. experts and think tanks express great consternation about the shock China will experience because it dominates auto and value-added manufacturing, two shocks that hit the U.S. are more pressing for investors. First, the IEA says this is the largest oil market disruption in history. The war in the Middle East is intensifying and disruptions have pushed the September WTI rate to its highest level since mid-June, encouraging investors and policymakers to look at energy-led declines in inflation measures, as we saw last week in the US and today in the UK. The destruction of helium, a by-product of natural gas and necessary for the production of semiconductors, is also felt. Second, the United States is threatening to replace expiring tariffs (implemented due to “balance of payments” issues) with fresh tariffs later this week (alleging violations of “forced labor” standards) after threatening Brazil with a 25% tariff earlier this month and a 50% tariff on some Canadian distressed goods this week.

The US dollar is narrowly mixed against G10 currencies and, excluding the oil-sensitive Norwegian krone, the rest of the currencies are mostly at +/- 0.1%. Benchmark 10-year bond yields are mostly stronger, while stock prices are mixed. The economic calendar for North America is serene today, with the Fed in the middle of a “quiet period” ahead of next week’s FOMC meeting. Today’s corporate gains include Alphabet and Tesla.

Prices

G10

Yesterday at serene speed, euro oscillates slightly below $1.1400, where options worth approximately EUR 2.9 billion expire today. The lower end of this month’s range is in the ~$1.1360-$80 area. US two-year bond yields have been rising over the last four sessions, a cumulative augment of several basis points, and the US two-year bond premium over Germany has increased from a two-month low last week (~138 bps) to around 146 bps now. A move above yesterday’s high (~$1.1430) would assist stabilize the technical tone after making lower lows for five consecutive sessions.

The dollar rose for the fourth session in a row against the greenback Japanese yen yesterday and hit a fresh 40-year high of almost ¥163.25. This continued today. The recent rhetoric about intervention if necessary was repeated earlier today. The dollar strengthened above the upper Bollinger Band (today ~163.20 JPY). In Europe, where nearly $1.6 billion in options expire today, it is 163 yen. Speculation that another rate hike could come sooner has pushed short-term interest rates in Japan higher today, with the swaps market now having about an 83% chance of a discounted augment in October, up from just under 60% at the end of June.

Sterling dropped yesterday for the fourth session in a row. This is the longest decline in two months. It was also offered against the euro, where it suffered one of the largest losses since mid-May. The yield on 10-year Gilt bonds yesterday reached its highest level in two months, which seemed to be a bull’s-eye for the fresh government. Sterling was yesterday sold to a five-day low near $1.3360. Today it persists despite the cushioned CPI report. This area includes the 20-day moving average and a (50%) retracement of sterling’s gains from the yearly low (June 24, ~USD 1.3140). A breakout could then spur a move towards $1.3300.

The expansion of the two-year U.S. bonus on Canada and the fresh threat of 50% tariffs on an estimated $20 billion of U.S. imports from Canada have put pressure on Canadian dollar yesterday lower. The two-year U.S. premium rose by almost seven basis points yesterday and by almost six on Monday. At 143 bps, it reached a fresh high since May 2025. The US dollar rose to around C$1.4110 and met its retracement target (38.2%) for a pullback this month. Consolidating today in serene trading between around C$1.4085 and C$1.4110. The next obstacle can be seen in the CAD1.4125-55 area. Approximately $635 million in options expire today at C$1.4075.

The Australian dollar Yesterday the prices were powerful, but the gains stopped in the tardy European morning, slightly above USD 0.7025. It retreated in North America and settled just below $0.7000. Today, the Australian is struggling to get back above $0.7000. The high is just below $0.7015. While it has held above $0.6990, it looks vulnerable. Returning to Monday’s low (~USD 0.6965) is risky.

EM

Disappointing Mexican retail sales in May (-0.6% compared to the median forecast in a Bloomberg survey of 0.1%) held back growth Libra gained after reaching a three-day high. For most of the North American session, the dollar fluctuated around the MXN17.40 level. It didn’t stay below MXN17.40 for long today and looks like it may break past yesterday’s high (~MXN17.4375). After weakening in the previous two sessions, the Colombian peso regained its leading position among emerging market currencies yesterday, gaining about 0.7%. Late last week, the Colombian peso reached its best level since the beginning of 2020 as the US dollar approached COP3200.

The dollar fell to a fresh one-month low against the offshore currency yesterday yuan (~CNH6.7635). The three-year low was recorded on June 17 near CNH6.7540. The dollar is seeing more bias and has reached CNH6.7760 today, slightly below Monday’s high (~CNH6.7785). The Bank of China has set the dollar reference rate at CNY 6.7933 (CNY 6.7917 yesterday).

Rising oil prices have helped the US dollar gain more against the US dollar Indian rupee Today. The dollar touched INR 96.5760 and settled slightly below that level. It has touched its highest level since setting the record two months ago near INR 96.9650. The trend line drawn from the lows of tardy June and early July is trading around INR 95.90 today and INR 96.10 at the end of this week.

Other markets

Yesterday’s augment in the Nasdaq index was the largest this month. Added to this are Beijing’s efforts to support local communities shareshad confined side effects today. The mood was mixed on major stock exchanges in the Asia-Pacific region, although markets in Taiwan and South Korea posted gains. The European Stoxx 600 index is rising for the second session in a row, while US index futures point to a lower opening. Alphabet and Tesla report earnings today.

Benchmark yield on 10-year bonds they are stronger today. The yield on 10-year US treasury bonds was above 4.60% yesterday for only the third time this year. The highest level this year was recorded on May 19, just below 4.69%. It is currently close to 4.63%. Over the past three sessions, the 10-year breakeven (the difference between the conventional yield and an inflation-protected security) has increased by about three basis points, and the expected year-end Fed funds target rate has increased by almost three basis points. They appear to be responsible for most of the augment in 10-year bond yields. Asia-Pacific yields were mostly 2-3 bps higher and European yields were 1-2 bps higher as many hit fresh three-month highs today.

Gold rose by about 1.5% yesterday, the largest advance since July 2 (that day saw disappointing US employment growth in June). The yellow metal rose marginally to $4,084, a six-day high. Good buying followed a morning cut in North America to just below $4,045, but sellers blocked the upside on a move back above $4,080. Today’s continued purchases pushed the gold price to almost $4,142, but fell to just below $4,120 by the end of morning trading in Europe. Silver jumped 4% yesterday, the biggest gain since June 11. The session high was recorded during the European morning (~$59.25). After falling by almost $1 on the North American morning, buyers have reemerged. Silver stopped a fraction of a cent below $60 today and finds support in Europe near $59.

September WTI rose another 2.25% yesterday after rising about 5.3% in the previous two sessions. The contract value briefly exceeded $85. The $84.55 area corresponds (61.8%) to the decline retracement from the May 18 contract high (~$95.30). It reached USD 88.60 today and increased by almost 4.5% during morning activity in Europe. There is a congestion band that extends to around $90.

Data

The Great Britain the reported June CPI increased by 0.1%, which allowed the year-on-year rate to decline to 2.6% from 2.8%. The base rate remained stable at 2.6%. This is the third month in a row in which core prices have increased by less than 3% year-on-year. They have grown faster than 3% since the end of Q3 2021. Prices for services, which remain unchanged, fell to 3.6% from 3.7%. Lower energy and food prices were reported, combined with weighty clothing markdowns. One of the fresh government’s first initiatives was to eliminate VAT on electricity, which is estimated to be worth around £45 per household this year. The government said it would pay for the interruption, abandoning the previous government’s plan to create a national digital ID. However, a Starmer government official said the ID program was not funded.

Japan saw a larger-than-expected June trade deficit of 407 billion yen. Deviating from a powerful seasonal pattern, it worsened from the 392 billion yen shortfall in May. Although the yen is undervalued according to various indicators, this has not resulted in a trade surplus, but the deficit is decreasing. The average monthly deficit in H1 25 was approximately JPY 393 billion and on average in the first six months of this year. was approximately JPY 169 billion. Exports increased by 19.3% year-on-year, while imports increased by 25.4% year-on-year.