Key Market Insights:

• The U.S. Dollar: Holding Steady Amidst Crosscurrents
• Eurozone: Trade Tensions on the Horizon
• British Pound: Mounting Debt Concerns

Market Recap

Yesterday's market activity was largely shaped by a flurry of news, particularly around trade tensions and their potential ripple effects. Here's what you need to know:

Trade Tensions Take Centre Stage

Global trade policy dominated headlines. The US administration reiterated its firm stance on implementing tariffs from August 1st, confirming no extensions. In response, the European Union signalled its readiness for counter-tariffs, with Germany's finance minister explicitly stating the bloc's preparedness for retaliation. China also weighed in, issuing a warning against rekindling trade disputes and threatening measures against any nation that attempts to exclude it from supply chains. This ongoing friction remains a significant factor for global markets.

Sterling Under Pressure: UK Debt Concerns

The British Pound experienced a notable decline. This followed a sharp increase in UK government bond yields, reflecting heightened worries about the nation's debt levels. A recent reversal on welfare reforms, coupled with warnings from the Office for Budget Responsibility (OBR) about the "relatively vulnerable" state of the UK's public finances and mounting economic risks, contributed to this sterling weakness.

Australian Dollar Surprises with Rate Hold

In a surprising move, the Reserve Bank of Australia (RBA) opted to keep its interest rates unchanged. This decision, against market expectations for a cut, provided a boost to the Australian Dollar, which saw gains across the board.

Today’s Market Update:

Today's market dynamics remain heavily influenced by ongoing trade developments, particularly concerning US tariffs. Here's a concise summary of the latest:

US Tariff Escalation and Global Trade Impact

The United States is pressing ahead with its aggressive tariff agenda. This has been explicitly highlighted by the US administration confirming forthcoming letters to an additional 15-20 countries regarding new tariffs. This broad application of duties is demonstrably creating instability in global trade relationships.

Copper Market Reacts Sharply to New Tariffs

A significant market reaction was seen in copper prices. Following a new US announcement of a 50% tariff on copper imports, US copper futures surged to unprecedented highs, marking their largest single-day percentage gain on record. This demonstrates the immediate and dramatic impact of these tariffs on specific commodities and global supply chains.

New Tariff Threats Emerge

The scope of potential tariffs is expanding. The US administration has now indicated possible duties of up to 200% on pharmaceuticals. Furthermore, explicit threats of punitive tariffs have been directed at the European Union if a trade agreement is not reached with the US. These declarations underscore the ongoing and widening nature of trade disputes.

Dollar's "Safe Haven" Status Under Scrutiny

The continued aggressive rollout of US tariffs appears to be eroding the long-held "safe-haven" status of the US dollar. This suggests a potential shift in investor perception, as these policies introduce uncertainty and risk into the global financial system.

The evolving tariff landscape is creating considerable market shifts.

8th July 2025

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