Good morning traders from a mostly cloudy Amsterdam, where it is around 21°C near IntelliTrade HQ with a few morning showers before brighter spells take over later. Coffee is settled, the screens are finally showing some green after a brutal week in technology, and the yen is back at the centre of the FX story. The BOJ sounded firmer, Japanese authorities have already stepped into the currency market, but USD/JPY is still near 161. That tells us plenty.
Overall Market Sentiment:
The mood is risk-on this morning, but fragile underneath.
Asian technology shares are rebounding sharply after strong earnings helped calm fears around AI spending. South Korea’s market has recovered part of this week’s collapse, Japan is higher and U.S. technology futures are pointing up again.
I would not overcomplicate this. The rebound is real, but it does not erase what happened earlier in the week. Long-term U.S. yields remain high, China’s latest business surveys were weak and the yen is still struggling despite official intervention and a firmer BOJ message.
My actual view today is that the dollar has lost some momentum, but this is not yet a clean broad USD weakness story. The move is being driven partly by lower short-term yields and official support for Asian currencies. The longer end of the U.S. bond market is still warning that inflation credibility remains an issue.
The mistake here would be treating today’s equity bounce as proof that the macro pressure has disappeared. It looks more like a reset after an excessive technology decline.
Geopolitics:
Oil has fallen back toward $87 even though Middle East risks remain active. More supply is moving through key shipping routes, which is reducing the immediate shortage premium, but fresh disruption near Egypt’s Damietta port has created another concern around Mediterranean and Suez-linked flows.
That matters because energy is no longer moving in one direction every day. The inflation shock has eased, but the supply network remains vulnerable.
For FX, lower oil helps EUR, GBP and JPY through reduced import costs. It removes some support from CAD. It also takes a little pressure away from central banks, although not enough to make them comfortable yet.
Macro Calendar:
Today
- Bank of Japan decision: The BOJ kept its policy rate at 1%, with one member preferring an increase to 1.25%. The bank also warned more clearly that underlying inflation could move above its target, keeping further policy tightening in the conversation.
- BOJ communication and the yen: The policy language was firmer, but the yen weakened after the decision because the bank did not signal an immediate acceleration in its tightening cycle. That is the important distinction. Concern about inflation is rising, but the pace of action remains gradual.
- China’s July PMIs: Manufacturing activity fell back into contraction, while the services and construction measure also weakened. That complicates today’s positive equity mood because China’s domestic economy is still not confirming the optimism seen in some technology and export sectors.
- Euro-area inflation: July’s preliminary figures will show whether June’s cooling continued or whether energy and service costs are rebuilding pressure. The details matter for whether the ECB can remain patient after keeping rates unchanged.
- Canadian GDP: Canada needs evidence that growth is holding up beyond the energy sector. The report matters more than usual because CAD has recently struggled to benefit consistently from high oil prices.
The week ahead
- Monday, global manufacturing PMIs and U.S. ISM manufacturing: These reports will show whether July’s weakness was concentrated in China or part of a broader industrial slowdown. Prices paid will matter because tariff and supply-chain pressure remain active inflation risks.
- Wednesday, New Zealand labour data: Employment, unemployment and wage growth will help clarify whether the RBNZ’s restrictive stance is slowing the economy without fully removing inflation pressure.
- Wednesday, U.S. ISM services: Services remain the larger part of the U.S. economy and one of the more persistent inflation areas. Markets will focus on activity, employment and the prices component.
- Friday, U.S. employment report: This is the main event of the week ahead. Job creation, unemployment and wage growth will shape whether the Fed’s next move remains an open debate or starts leaning more clearly in one direction.
- Friday, Canadian labour report: Canada’s employment data will arrive alongside the U.S. release, creating an important relative test for USD/CAD. The cleaner question is whether Canada’s labour market can stabilise while trade uncertainty remains elevated.
Currency Outlooks:
⚖️ USD - Softer this week, but the bond market is not relaxed
The dollar index is around 100.2 and is heading for a weekly decline of roughly 1%. EUR/USD is near 1.1510 and GBP/USD is holding around 1.3450 after both benefited from Thursday’s broad dollar drop.
The dollar has cooled, but it is not broken yet.
Shorter-dated yields have eased because the Fed left rates unchanged and incoming inflation data have been less aggressive. At the same time, long-term yields remain close to multi-year highs as markets question fiscal policy, tariffs and the Fed’s ability to keep future inflation expectations anchored.
That split matters. It explains why USD can weaken against EUR and GBP without creating a full risk-on liquidity move across every market.
The cleaner read for me is mixed. Dollar support has weakened at the front of the yield curve, but it remains alive through longer-term yields and defensive demand. The bias becomes softer if next week’s employment and services data cool together. It strengthens again if wages, activity or service prices remain uncomfortable.
⚖️ EUR - Lower oil and a softer dollar provide breathing room
EUR/USD is holding around 1.1510 after reaching its strongest area in roughly six weeks. The euro has benefited from the dollar’s pullback, lower energy prices and stronger-than-expected euro-area growth data earlier this week.
Today’s inflation release now decides whether that support has a domestic foundation.
Cooling underlying inflation would reduce pressure on households and give the ECB room to stay patient. But it could also widen the policy difference with the United States if American service inflation remains firmer.
I would not call the euro broadly strong yet. It has recovered because several pressures eased at the same time. Risks remain balanced to mildly firm while oil stays below $90 and U.S. short-term yields remain contained.
⚖️ GBP - The BoE was patient, not relaxed
GBP/USD is trading around 1.3450 after the Bank of England kept its policy rate at 3.75%. The decision was divided, with several policymakers still concerned enough about inflation to prefer a firmer stance.
Sterling initially held up because the BoE did not completely dismiss the energy and inflation risks. But the bank also made clear that it is not preparing markets for an immediate policy shift.
That leaves GBP in a balanced position. The pound retains some rate support, although weak domestic growth makes that advantage less clean than it appears.
The mistake here would be treating every hawkish vote as automatically positive for sterling. The source of inflation matters. Imported energy pressure can lift prices while weakening the economy underneath.
⚖️ CAD - Oil has cooled, so domestic data must take over
CAD has lost part of its commodity support as Brent falls into the $87 area. The currency did not fully benefit when crude was above $100, and now it faces the reverse problem as the energy premium fades.
Today’s GDP report needs to show that economic activity is stabilising despite tariffs, slower household demand and a wide yield gap with the United States.
Risks remain mixed. Lower oil is a headwind, but calmer geopolitical conditions support global growth. Next Friday’s Canadian employment report should provide the cleaner domestic test.
⚖️ CHF - Defensive support fades as equities recover
The franc is receiving less immediate haven demand as technology shares rebound and oil declines. That is normal after the defensive pressure seen earlier this week.
CHF still has protection underneath it because the geopolitical situation remains unresolved and global bond volatility is high. But against USD, it continues competing with a much stronger yield profile.
Risks stay balanced. CHF becomes more relevant again if the equity rebound fails or geopolitical conditions deteriorate.
🔻 JPY - Intervention changed the speed, not the underlying problem
USD/JPY is trading around 160.5 to 161 after an extraordinary 48 hours. Official intervention pushed the pair sharply lower from levels near 164, but part of that move has already reversed following the BOJ’s decision.
The central bank’s message was firmer. It acknowledged more clearly that underlying inflation could exceed 2% and kept further increases on the table.
Still, the pace remains gradual, and that is what markets are reacting to.
The cleaner read for me is that intervention has changed the speed of yen weakness without fixing the larger rate and fiscal problem. The BOJ is tightening slowly while U.S. long-term yields remain elevated, and Japan continues carrying a significant imported-energy burden.
JPY risks still lean toward weakness, but official-action sensitivity is now extreme. Traders should not misunderstand sudden yen strength as proof that the macro trend has reversed. It may reflect intervention, thin liquidity or position reduction rather than a lasting change in policy fundamentals.
⚖️ AUD - Equity relief helps, but China’s data is a warning
AUD/USD is trading near 0.7030, recovering as Asian technology shares rebound and the dollar softens. That is the supportive side of today’s story.
China’s PMIs are the uncomfortable side. Manufacturing returned to contraction, services weakened and domestic demand remains fragile. Australia cannot completely separate its outlook from that picture.
Softer Australian inflation earlier this week also removed some immediate RBA support. Risks remain balanced, with stronger equity sentiment offset by weaker regional growth signals.
⚖️ NZD - Resilient for now, with labour data ahead
NZD/USD is holding near 0.5870, supported by the weaker dollar and improved risk appetite. It has also retained some domestic support from New Zealand’s recent inflation figures.
Next Wednesday’s labour-market report becomes the main test. Strong wage and employment data would keep the RBNZ cautious, while clearer weakness would shift attention back toward the slowdown.
For now, risks remain balanced. NZD is holding up well, but it still needs domestic confirmation rather than relying entirely on USD weakness and the technology rebound.
Cross-Asset Wrap:
- 🪙 Gold: Gold is trading around $4,075 to $4,080, easing slightly today but heading for its first monthly gain in five months. A modest dollar rebound and elevated real yields are creating pressure, while geopolitical uncertainty and demand around the $4,000 area continue providing support. Watch next week’s U.S. labour and services data for the next meaningful move in real yields. [USD] [REAL YIELDS] [GEOPOLITICS]
- 🥈 Silver: XAG/USD is trading around $58.60 to $58.80, slipping modestly after recovering through the second half of the month. Dollar conditions and yields remain important, while today’s technology rebound supports the industrial-demand side despite weak Chinese PMIs. Watch whether the rebound in semiconductor shares lasts beyond one session. [USD] [YIELDS] [INDUSTRIAL DEMAND]
- 🛢 Oil (Brent): Brent is trading around $87 to $88 per barrel, falling roughly 2% today after moving above $90 earlier in the week. Increased flows through key shipping routes are reducing immediate shortage concerns, while Middle East conflict and fresh disruption near Egypt keep logistics risk elevated. Watch physical shipping activity and supply flows rather than every individual geopolitical headline. [SUPPLY] [GEOPOLITICS] [INFLATION]
- 📈 Stocks: Asian equities are rebounding sharply, with Japan’s Nikkei up around 4%, the wider regional index gaining strongly and South Korea recovering part of this week’s historic decline. Better technology earnings and renewed confidence in AI demand are driving the move, although long-term yields and weak Chinese activity remain constraints. Watch whether the recovery broadens beyond chips and other heavily pressured technology shares. [TECHNOLOGY] [EARNINGS] [RISK]
- ₿ Crypto: Bitcoin is trading around $64,000, after moving between roughly $63,900 and $65,300 during the session. Improved technology sentiment is helping risk appetite, while elevated real yields and uncertainty around future Fed policy continue limiting liquidity conditions. Watch whether Bitcoin follows the equity rebound or remains contained ahead of next week’s U.S. data. [LIQUIDITY] [REAL YIELDS] [RISK]
The main thing I care about today is that Japan has now used both intervention and a hawkish policy message, but the yen is still struggling to hold its gains.
That does not mean the actions were pointless. They stopped a disorderly move and reminded the market that officials are uncomfortable around recent levels.
But they did not remove the cause.
Japan’s policy rate remains well below comparable rates elsewhere, U.S. long-term yields are still elevated and the weak yen continues feeding imported costs into the economy. The BOJ is moving in the right direction, but the market is questioning whether it is moving quickly enough.
The second thing I care about is the technology rebound. This week’s decline became extreme, so a sharp recovery makes sense. Strong earnings have also provided a real reason for some confidence to return.
The mistake here would be assuming that one strong session settles the AI spending debate. Companies still need to prove that rising investment produces sustainable revenue, productivity and cash flow. That discussion is not going away.
For the dollar, the picture has become less one-sided. USD has lost short-term rate support and is heading for a weaker week. But high long-term yields, tariff risk and stronger relative U.S. growth prevent me from calling the dollar broken.
I would not overcomplicate this.
The yen remains vulnerable even after intervention. The dollar has cooled without losing its wider macro foundation. EUR and GBP have improved because oil and U.S. short-term yields fell. AUD and NZD are receiving relief from equities, but China’s weak surveys are a warning.
Next week puts the focus back on the U.S. economy. Manufacturing, services and employment will tell us whether the Fed’s decision to wait was sensible or whether inflation and labour resilience keep the next policy move firmly in play.
That is the real market test after a very noisy week.
Want to turn this market context into a trading plan?
Check today’s Currency Strength Meter and Economic Calendar inside IntelliTrade Pro.
This is general, educational macro and FX commentary. It is not investment advice and not a trading signal.
Need help decoding this article? Get our free Macro Decoder ebook when signing up to our newsletter using the sign up button below! No spam, just value.