Good morning traders from a hot and sunny Amsterdam, where it is around 22°C near IntelliTrade HQ and temperatures could reach 32°C this afternoon. Coffee is still on the desk, although something colder may be the smarter choice later. On the screens, the yen has given back a small part of its intervention-driven move, oil is bouncing from Monday’s collapse, and the dollar is trying to stabilise near a two-month low.
Overall Market Sentiment:
The mood is mixed and slightly cautious.
Wall Street rallied strongly on Monday as lower oil prices, firm corporate earnings and better U.S. manufacturing data restored some confidence. This morning is less convincing. Asian equities are softer, Japanese bond yields are rising and Brent has recovered toward $85 after Iran denied that peace negotiations are taking place.
My actual view today is that the market has removed some of July’s panic, but it has not settled the inflation or dollar debate.
The dollar has cooled, but it is not broken yet. Coordinated support for the yen and Monday’s oil decline created real USD pressure. At the same time, U.S. manufacturing is improving, input costs remain elevated and markets still see a meaningful chance of a Federal Reserve increase in September.
The mistake here would be treating the dollar index near 100 as proof that the entire U.S. macro advantage has disappeared. A large part of the recent move came through USD/JPY, where authorities have directly changed the balance.
Geopolitics:
The diplomatic picture remains messy. The United States says discussions with Iran are taking place, while Iran says no negotiations are under way or scheduled. Oil has recovered slightly as markets question whether Monday’s decline went too far.
Shipping through the Strait of Hormuz and Bab el-Mandeb remains limited, with some tankers taking longer routes and facing higher insurance costs. A vessel was also reportedly struck by an unknown projectile near Oman.
That matters because Brent near $85 still contains a geopolitical premium. The premium is smaller than it was above $100, but it has not disappeared. I would not overcomplicate this. Oil is calmer, not normal.
Macro Calendar:
Today
- U.S. job openings: This is the first important labour-market test before Friday’s employment report. Markets are watching whether demand for workers is cooling gradually or falling fast enough to weaken expectations for another Fed move.
- U.S. trade balance: The June report will show how tariffs, import demand and recent currency moves are affecting external trade. A wider deficit can support the growth picture through strong imports, but it can also raise questions about the dollar and trade policy.
- U.S. factory orders and final durable-goods data: The details outside aircraft and defence orders should give the cleaner view of business investment. Yesterday’s strong manufacturing survey raised expectations, so weak orders would create an awkward contrast.
- Canadian merchandise trade: CAD will focus on energy exports and the effect of recent U.S. trade restrictions. Canada needs evidence that stronger oil revenues are reaching the wider external economy.
The rest of this week
- Wednesday, New Zealand employment: Jobs, unemployment and wage growth will determine whether the RBNZ can keep focusing on inflation or needs to give more attention to economic weakness.
- Wednesday, U.S. private employment and ISM services: Services are the larger part of the U.S. economy and one of the hardest places to remove inflation. The employment and prices components matter more than a small headline change.
- Thursday, U.S. productivity and labour costs: Strong productivity can make wage growth less inflationary. Weak productivity combined with rising labour costs would strengthen the argument for restrictive Fed policy.
- Thursday, U.S. jobless claims: Claims remain one of the cleanest high-frequency signals for whether labour conditions are deteriorating. Markets will compare them with today’s job openings before Friday’s report.
- Friday, U.S. and Canadian employment: This is the week’s main FX event. U.S. payrolls, unemployment and wages will shape September Fed expectations, while Canada’s report creates a direct comparison for USD/CAD.
Currency Outlooks:
⚖️ USD - Weak index, but the wider story is not settled
The dollar index is hovering near 100 after touching its lowest area in roughly two months. EUR/USD is around 1.1510, GBP/USD is near 1.3425 and USD/JPY is trading around 157.5.
The recent USD decline has three clear drivers. The Fed kept rates unchanged, oil dropped sharply and coordinated intervention pushed the yen higher. Those are legitimate reasons for the dollar to cool.
The other side matters too. The U.S. 10-year yield remains close to 4.68%, manufacturing activity has improved and markets still attach a meaningful probability to a September Fed increase.
The cleaner read for me is that dollar risks are mixed. USD weakness becomes more convincing if job openings, services employment and Friday’s payrolls all cool together. The bias firms again if labour demand remains resilient and service-sector prices stay uncomfortable.
⚖️ EUR - Lower oil helps, but Europe still needs growth
EUR/USD is holding near 1.1510 after briefly reaching the mid-1.15 area on Monday. Lower energy prices and reduced U.S. rate pressure have provided the euro with some breathing room.
The problem is that Europe still needs its own growth story. Manufacturing conditions have improved in parts of the region, but household demand and industrial investment remain uneven.
Risks are balanced with a mild positive tilt while Brent stays below $90 and U.S. yields remain contained. That tilt weakens if oil rebounds further or the U.S. labour data rebuild the dollar’s policy advantage.
⚖️ GBP - Resilient, but quieter than the euro story
GBP/USD is trading around 1.3425 after giving back part of Monday’s advance. Sterling continues to receive support from a divided Bank of England, with several policymakers still uncomfortable about inflation.
Lower oil is helpful for the UK because it reduces imported price pressure and supports household purchasing power. Still, weak domestic growth prevents GBP from developing a completely clean strength story.
Risks remain balanced to mildly firm while the BoE retains a more cautious policy tone than several European peers.
🔻 CAD - Oil’s rebound helps, but the larger support has faded
CAD is receiving some relief as Brent recovers toward $85, but crude remains well below last week’s levels. That removes part of Canada’s recent terms-of-trade advantage.
Today’s trade report should show whether energy exports and non-U.S. demand are offsetting the pressure from tariffs and softer domestic activity. Friday’s employment data will be the more important test.
Risks lean slightly toward weakness until Canada develops a stronger domestic growth argument.
⚖️ CHF - Defensive demand is quieter, not gone
The franc is receiving less haven demand after Monday’s equity rally and the decline in oil. Lower energy prices are also helpful for Switzerland’s import costs.
CHF remains relevant because geopolitical uncertainty and global bond volatility are still elevated. Its defensive argument is cleaner against cyclical currencies than against a dollar offering much higher yields.
🔺 JPY - Intervention is holding, but the bond market is a warning
USD/JPY is trading near 157.5 after reaching 155.2 during Monday’s intervention-sensitive move. The yen remains roughly 4% stronger than it was before coordinated support began.
That is meaningful. Authorities have made rebuilding aggressive pressure against JPY much more difficult.
But today’s weak Japanese government-bond auction is a warning. Rising local yields can support the yen through rate expectations, but disorderly bond-market pressure can also raise fiscal concerns and complicate the BOJ’s policy path.
Risks still lean toward short-term JPY strength because the threat of further official action remains credible. The bias weakens if USD/JPY holds above the upper 157 area and markets conclude that intervention has created a temporary floor rather than a lasting change.
⚖️ AUD - Better domestic resilience meets softer Asian equities
AUD/USD is trading around 0.7020, holding above the psychological 0.7000 area. The softer dollar and lower oil have improved the general backdrop, while Australia’s equity market has also performed relatively well this morning.
The complication is weaker sentiment across several other Asian markets and continued uncertainty around China’s domestic economy. Softer Australian inflation has also reduced the urgency for further RBA tightening.
Risks remain balanced. AUD has support from improved global manufacturing and a softer dollar, but it still needs stronger regional growth confirmation.
⚖️ NZD - Labour data must provide direction
NZD/USD is trading near 0.5865, slightly softer ahead of Wednesday’s employment report. The currency still has domestic support from elevated inflation, but unemployment has been moving higher.
The cleaner question is whether wage growth remains firm while employment cools. That combination would leave the RBNZ with an uncomfortable inflation and growth mix.
Risks remain balanced before the data. Clear labour resilience would improve the rate story, while weaker employment would leave NZD more dependent on global sentiment.
Cross-Asset Wrap:
- 🪙 Gold: Gold is trading around $4,060 to $4,065, holding steady after falling to its weakest closing area since late July on Monday. Middle East uncertainty and a softer dollar are providing support, while a U.S. 10-year yield near 4.68% and expectations for possible Fed tightening remain constraints. Watch whether today’s job-openings report changes September rate expectations. [USD] [REAL YIELDS] [JOBS]
- 🥈 Silver: XAG/USD is trading around $58.80 to $58.90, gaining more than 1% and outperforming gold this morning. Dollar weakness and stable yields are helping, while stronger U.S. manufacturing provides support through the industrial-demand channel. Watch whether Wednesday’s services data confirm broader economic resilience. [USD] [YIELDS] [INDUSTRIAL DEMAND]
- 🛢 Oil (Brent): Brent is trading around $84.50 to $85.00 per barrel, recovering roughly 1% after Monday’s decline of about 7%. Iran’s denial of active negotiations, limited shipping through key waterways and a fresh maritime incident near Oman have rebuilt part of the geopolitical premium. Watch physical tanker flows and confirmed diplomatic progress rather than political claims alone. [SUPPLY] [GEOPOLITICS] [INFLATION]
- 📈 Stocks: Asian markets are mixed to softer, with the wider regional index down around 0.5% and Japan’s Nikkei slipping roughly 0.3%, while U.S. futures are modestly higher after Monday’s strong Wall Street rally. Better corporate earnings and stronger U.S. manufacturing are supportive, but Japanese bond volatility and continued doubts around AI spending are limiting confidence. Watch whether the rebound broadens beyond the largest U.S. technology companies. [EARNINGS] [YIELDS] [RISK]
- ₿ Crypto: Bitcoin is trading around $63,400 to $63,500, down roughly 0.5% after failing to follow Monday’s equity rally fully. A softer dollar is supportive, but elevated real yields and caution before the U.S. labour releases continue limiting liquidity conditions. Watch whether Bitcoin reconnects with improving equities or remains capped by the rates outlook. [LIQUIDITY] [REAL YIELDS] [RISK]
The main thing I care about today is the difference between dollar weakness and yen strength.
They are connected, but they are not exactly the same story.
The yen has received coordinated official support. That forced a major adjustment in USD/JPY and pulled the dollar index lower. EUR and GBP then benefited from the wider reduction in USD momentum.
But AUD has only moved modestly. NZD is waiting for labour data. CAD has lost oil support. That tells us the dollar decline is not yet equally strong across the whole FX market.
The mistake here would be assuming the dollar index has already answered Friday’s employment question. It has not.
Yesterday’s U.S. manufacturing report showed that activity can improve while price pressure remains elevated. Today’s job openings tell us whether companies are still looking for workers. Wednesday’s services data show whether the largest part of the economy remains firm. Friday tells us whether actual hiring and wages confirm it.
I would not overcomplicate this.
If labour demand cools across all three reports, the recent dollar weakness gets a genuine macro foundation. If job openings, service-sector employment and wages remain resilient, the market may decide the USD move became too dependent on intervention and lower oil.
My actual view today is that JPY retains the cleaner immediate support because authorities have changed the risk around the currency. The broader dollar picture is mixed, not broken.
Oil is calmer, but diplomacy is uncertain. Equities are stronger, but Asia is not fully confirming Wall Street’s optimism. Gold is steady, but real yields remain high.
This is a market waiting for labour data to turn a noisy intervention move into a proper macro conclusion.
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This is general, educational macro and FX commentary. It is not investment advice and not a trading signal.
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