* EU to ramp up retaliation plans as UAS tariff deal prospects dim

* President Trump announces trade deals with Philippines and Indonesia

* Focus on earnings with GOOG and TSLA reporting after the US close

* Bitcoin and bullion surge higher as Treasury yields slide

FX: USD turned lower again with the 50-day SMA looking as though it has acted a decent resistance again. That is currently at 98.56. We are in the Fed blackout period so comments from Chair Powell didn’t impact. There was more noise around a review of non-monetary policy operations. Markets are relatively quiet ahead of next week’s FOMC meeting, non-farm payrolls and then the August 1 tariff deadline. We are getting mixed messages from the administration with that being a ‘hard’ deadline or possibly moveable with an extension for China now possible beyond its own deadline. Markets assume the TACO trade plays out, though some observers think investors are way too complacent.

EUR was bid for a third straight day as the world’s most traded currency pair rebounds off the 1.16 area. Focus is on Thursday’s ECB meeting where the bank will keep rates on hold. The near-term risk lies with the ECB’s communication around its rate outlook, given that recent messaging has been largely neutral. That contrasts somewhat with money markets that continue to price about one full 25bpt rate cut by December.

GBP lagged its peers as it rose just above its 50-day SMA at 1.3511. The daily RSI remains just above 50 in relatively neutral territory. Second tier fiscal data revealed greater than expected borrowing in June, and comments from BoE Governor Bailey have touched on the topic, as he highlighted the impact of fiscal policy on curve steepening. That borrowing very likely means a big fiscal event at the Autumn Budget.

JPY outperformed for a second day as investors appeared to be relieved that the ruling party didn’t lose more seats, while there were positive noises around a US-Japan trade deal. Prices have dropped through a major Fib level (38.2%) of this year’s sell-off at 147.13. The 50-day SMA is at 145.14 with the minor Fib at 144.36.

AUD was up for a third straight day though the subdued risk tone hasn’t helped massively. The RBA minutes stated that the majority of policymakers thought it prudent to wait for an inflation slowdown before easing, which would be warranted over time. CAD strengthened for a third day in a row, moving away from 50-day SMA resistance. The BoC’s Business Outlook Survey predictably reflected Canadian firms’ concerns about trade and tariffs with a curb in hiring and investment.

US stocks: The S&P 500 printed up 0.03% at 6,308, another fresh record closing high. The Nasdaq settled lower, by 0.50% at 23,064. The Dow Jones finished up at 44,525, adding 0.46%.  Health, Real Estate, Materials and Utilities led the gainers – notable defensive stocks, while only Tech and Communication Services were in the red. The tech-heavy Nasdaq 100 lagged and was weighed on by weakness in megacap names like Nvidia, Microsoft, Broadcom, and Netflix, while the Russell 2000 pared Monday’s losses. Health sat at the top and was buoyed by Danaher’s results beat. It is also worth noting that in the midst of earnings season, some of the tariff impact is starting to show, with GM tumbling post earnings following weak guidance, while RTX also took a hit after it cut its profit guidance amid the impact of tariffs.

Asian stocks: Futures are mixed. APAC equities were also mixed with record Wall Street highs not especially following through to Asia. The ASX200 printed a small doji, with losses in financials and energy offset by better materials and healthcare The RBA minutes continued to signal more rate cuts but didn’t move the dial.  The Nikkei 225 broke above 40,00 before pulling back as investors digested the ruling coalition’s upper house election setback. The Shanghai Comp and Hang Seng were rangebound even though the latter breached the 25,000 mark.

Gold continued its break higher, up another 1% as prices near the mid-June high at $3452. Falling Treasury yields and the dollar again helped bugs with tariffs tensions rising.

Day Ahead – Google and Tesla earnings

Google parent, Alphabet, and Tesla are the first of the “Magnificent Seven” megacaps to release after the US closing bell later today. The Mag 7 are back to outperforming the broader market that has returned toward performance being highly concentrated in a handful of names once again. We get Meta and Microsoft next Wednesday with Amazon and Apple 24 hours later.

In simple terms, that means where these stocks go, so too go the broader S&P 500 and Nasdaq indices. Guidance will be key, with any tariff impact being watched, though these megacap companies tend to thrive during periods of economic growth and decline during downturns. This trend suggests investors expect positive economic surprises and corporate profitability gains. Valuation could be an issue with markets 30% off their April lows and mostly rich valuations suggesting ‘misses’ will be punished way more than the upside ‘beats’.

Chart of the Day – Tesla hovering around moving averages

It’s been a volatile year for Tesla with the stock down around 12% year-to-date. Sales have slumped, so revenue, margins and earnings are all seen falling sharply with double digit declines. Analysts expect just $0.42 per share in earnings (-23% y/y), on $22.7 billion in sales with revenues seen tanking more than 11%. That’s been down to fading EV market share, stronger competition and a tarnished brand. Loss of EV credit sales has also been a headwind. Investors are seemingly pinning their hopes on the earnings call with CEO Elon Musk for updates on robotaxis, new product launches like the long-promised Model 2, the latest on full self-driving (FSD) and AI initiatives, plus the impact of the loss of EV credits. Option mkts are pricing in a +/- 7.5% move on Thursday when the stock reopens.

Initial support could be a zone which includes a major Fib level (38.2%) of the December to April drop at $319, and the 200-day and 50-day SMAs at $318 and $325. The July low is $288 with the 50% level near the late June top around $351/6.