Week of July 7

A somewhat shortened trading week saw better-than-expected NFP, while Eurozone inflation came in as expected, and a trade deal was finally reached.

The week ahead is relatively light on the economic calendar, with highlights including interest rate decisions from the RBA and RBNZ, as well as UK GDP figures and FOMC minutes in focus.

Week in Review

The US was away for a holiday on Friday, bringing forward some of the bigger market-moving events for the week. Thursday's early release of the NFP showed payrolls rising to 147,000 from 144,000 the previous month, which was revised higher, and well above the 100,000 forecast. The unemployment rate also ticked down to 4.1%, instead of rising to 4.3%. Despite the signs of tightness in the labour market, the market continued to price in a rate cut by the Fed in September.

China's official NBS manufacturing PMI did not return to expansion, with the Caixin services PMI measure coming in softer than the market had anticipated.

Euro Area inflation matched expectations of 2.0%, but the core rate remained unchanged at 2.3%, instead of rising to the forecasted 2.4%.

Japanese consumer confidence improved more than expected, rising to 34.5 from 32.8 the previous month.

Australia's trade surplus unexpectedly shrank to $2.2 billion from $4.9 billion in the prior month.

In geopolitics, the Trump Administration announced that it had reached a trade deal with Vietnam, the second country with which it has managed to reach an accord. The White House also stated that it would soon send "letters" to address the tariff rates. Meanwhile, the passage of Trump's "big beautiful bill" in Congress raised the debt ceiling.

Tensions in the Middle East came back to the fore after it was reported that Iran would withdraw from the IAEA's inspection of its nuclear sites after having clarified that inspections would continue. However, the US added new sanctions targeting smugglers of Iranian oil as the two countries were set to restart nuclear negotiations after the Iran-Israel war.

In Europe, the pound jittered mid-week after UK PM Keir Starmer had to reassure markets for a second time that there were no plans for Chancellor Rachel Reeves to step down.

Biggest Market Movers

• Silver hit a 13-year high as the dollar weakened, with demand from the solar panel industry fueling a persistent rise
• Crude prices bumped up in the middle of the week after better-than-expected Services PMI from China and progress on trade deals
• The Canadian dollar took advantage of dollar weakness and a narrowing trade deficit

Top Events in the Week Ahead

The relatively light economic calendar in the coming week could shift focus to the trade situation as the 90-day pause on "reciprocal" tariffs expires on July 9. The Fed will release the minutes of the last FOMC meeting, with traders likely looking for some more detail on why members are forecasting two rate cuts this year. Gold could react to both events, bringing into focus $3250 on one side and $3450 on the other.

RBA Poised to Cut Again

The consensus among economists and leading Australian banks is that the RBA will cut rates by 25 basis points at its meeting on Tuesday, as the economy continues to slow and inflation remains under control. The consensus is for at least one more rate cut this year, with markets likely looking for Governor Michelle Bullock to leave the door open for further easing, as economists suggest the Australian economy is underperforming the RBA's expectations. AUDUSD failed to extend to 0.66, with the next support sitting at 0.6500.

Dovish Hold Expected from RBNZ

The consensus that the RBNZ will hold rates unchanged is less solid, with an expectation that it will signal a cut without providing a timeline. However, inflationary pressures have reappeared, suggesting a drop in ‘easing’ language. Still, the general weakness in the Kiwi economy might not convince markets that the central bank will hold for long. After peaking at 0.6120, the kiwi could head to the 0.6000 round support.

UK Expected to Rebound

Britain will release a trove of economic data before the market opens on Friday, with the market focus on GDP growth.  Growth in May is expected to return to positive territory at 0.1% compared to the -0.3% recorded in April. On other data, manufacturing production is expected to increase and grow at an annual rate of 1.0%, up from 0.4% previously. Cable has found support at the 20-day moving average of 1.3600, with a break opening the door to 1.3400. On the other hand, positive readings could push prices past 1.3800, which the pound has failed to reclaim.

Other Events, Earnings

Monday sees the release of the UK Halifax House Price data. Tuesday includes the Australia NAB business confidence indicator as well as the German trade balance. The Chinese inflation rate is expected to be released on Wednesday. Thursday has the UK RICS house price balance. For Friday, Canadian job numbers are expected to be released.

In the earnings segment, the calm before the storm, as the last week before the start of earnings season sees a handful of corporate names reporting, including Delta Air Lines, PageGroup, and ConAgra Brands, with a production update from Shell.