You know when a date has been etched on your mind for some time? That can often prove to be an anticlimax, but in this instance, it heavily involves the extraordinary Trump administration. Of course, front and centre for markets this week is the tariff ‘Liberation Day’ pause deadline and what Washington’s next step will be in its trade war. US stocks markets have hit fresh record highs recently, with the benchmark S&P 500 a recognised crucial bellwether for President Trump.  The economy has remained resilient with inflation still relatively benign. And the most payrolls report wrong footed a more softly positioned market, even though the details showed the same sectors not typically associated with a strong and vibrant economy creating jobs.

Does this all mean Trump can play hard ball, with the knowledge and satisfaction of several big successes in his locker since his inauguration? The house passage of the OBBB (One Big Beautiful Bill) also got done by July 4 as DJT promised, further emboldening the POTUS, though market reaction to that may only impact through time, with more bond issuance and higher yields. Lags to the softer economic data and higher inflation also need to be watched in the months ahead, as Fed Chair Powell has alluded to in recent comments.

Countries that have dodged the trade bullet so far are the UK and Vietnam, while the China truce lasts until mid-August. Talks with Japan are proving frustrating, and any EU deal is going down to the wire, with symbolic retaliation by the region still a risk. Needless to say, this could be a noisy period for (FX) markets as the White House again makes heavy threats in order to get trade deals over the line, in whatever form plays to the US audience.

As a reminder, the top G10 FX performers during the worst of April’s volatility were the Swiss franc, the euro and the yen – in that order. The greenback was broadly sold. Indeed, even with that solid non-farm payrolls report, FX price action suggests investors were more than happy to sell dollars into rallies. The long-term trendline from 2011 lows comes in around 96.47 on the Dollar Index.

In Brief: major data releases of the week

Tuesday, 8 July 2025

– RBA Meeting: Markets expect the Board to cut the cash rate by 25bps, taking it to 3.60%. May CPI was softer than forecast though Q2 underlying inflation may remain in the top half of the bank’s 2-3% target range. Recent jobs data was strong with wage growth rising. Australia remains relatively insulated from reciprocal tariff issues.

Thursday, 9 July 2025

– RBNZ Meeting: The RBNZ is likely to leave the OCR unchanged at 3.25%. Its easing bias is expected to remain, but there will probably be little forward guidance. Economic activity has been stronger than expected but activity gauges suggest a slowdown. 

– Liberation Day Deadline: The 90-day tariff pause expires after April’s ‘Liberation Day’. No extension has been signalled, with the minimum 10% reciprocal tariff rising back to 20-30%+. Expectations are for last-minute ‘deals’ and symbolic punishment for those countries not acting in “good faith”.

Friday,11 July 2025

– UK GDP: Growth is expected to print at 0.1%, after the 0.3% contraction in April. This comes after a surprisingly strong start to the year, due to frontloading ahead of possible tariffs. Soft retail sales amid a cooler labour market sit with elevated inflation.

– Canada Jobs: Unemployment is forecast to print around 7% as the BoC recently stated the job market has weakened. A trade deal is crucial for the outlook, with the bank predicted to cut rates again in the autumn.