Forex News

Japan’s 10-year government bond yield climbed to around 1.5% on Wednesday, marking a five-week high as US-Japan trade talks showed signs of strain, particularly over Tokyo’s protection of its rice market. The move comes after US President Donald Trump announced a 25% tariff on Japanese goods, effective August 1, and confirmed there would be no revisions or delays to the broader set of duties imposed on 14 countries. Japanese Prime Minister Shigeru Ishiba called the tariff decision “truly regrettable” but reiterated Japan’s commitment to continue negotiations with Washington in pursuit of a mutually beneficial agreement. Adding to market unease, Bank of Japan board member Junko Koeda warned of potential second-round inflation effects stemming from recent food price increases, including rice. Meanwhile, growing speculation that Japanese lawmakers may unveil additional fiscal stimulus ahead of the July 20 upper house elections added further pressure to long-term bond markets.

Producer prices in Lithuania dropped by 2.7% year-on-year in June 2025 from a downwardly revised 2.8% fall in the previous month. This marked the sixth consecutive month of falling producer prices, albeit at a softer pace. Deflation eased for manufacturing (-2.7% vs -3.5% in May), while electricity, gas, steam & air-conditioning supply declined (-4.3% vs 2.3%). Additionally, prices edged down for water supply; sewerage, waste management and remediation activities (2.8% vs 2.9%). Meanwhile, costs increased for mining and quarrying (4.7% vs 0.4%). On a monthly basis, producer prices rose by 0.5%, rebounding from a 0.5% decrease in the preceding period.

Denmark’s seasonally adjusted goods and services trade surplus narrowed to DKK 23.4 billion in May 2025 from a downwardly revised DKK 27.2 billion in the previous month. This marked the lowest surplus since May 2024, as exports fell by 0.8% month-on-month to DKK 172.9 billion, weighed down by the decline in goods exports (-1.2%) and services exports (-0.1%). On the other hand, imports rose by 1.7% to DKK 149.6 billion, supported by the increase in goods imports (2.7%) and services imports (0.6%). For the first five months of the year, the country posted a DKK 121.5 billion surplus, widening from DKK 103.1 billion in the same period of 2024.

Japan’s machine tool orders fell by 0.5% year-on-year to JPY 133,150 in June 2025, slipping from a 3.4% increase in the previous month. This marked the first month of contraction in machine tool orders since September last year, mainly due to a decline of 3.3% from a year earlier in domestic demand to JPY 39,869. Meanwhile, foreign orders rose marginally by 0.3% to JPY 93,281. On a monthly basis, orders advanced by 3.4% in June, rebounding from a 1.2% decrease in the preceding period.

The euro held steady around $1.17, near its highest level since August 2021, as investors awaited updates on US-EU trade negotiations. The European Union aims to finalize a preliminary agreement with Washington this week to secure a 10% tariff framework beyond the August 1 deadline, while talks toward a permanent deal continue. On Tuesday, reports surfaced that the US proposed maintaining a 10% baseline tariff, with exemptions for key sectors such as aircraft and spirits. However, Washington has shown no willingness to extend exemptions to politically sensitive industries, including cars, steel, aluminum, and pharmaceuticals, despite requests from Brussels. In response, the EU is preparing retaliatory tariffs on various US goods and has warned that additional measures—such as export controls and restrictions on US companies' access to public contracts—could follow if no deal is reached. Meanwhile, in monetary policy, markets are pricing in just one more rate cut from the ECB this year.

European equity markets were set to open slightly higher on Wednesday as investors weighed the latest tariff announcements from Washington. US President Donald Trump ruled out any extensions to the newly imposed duties targeting 14 countries, scheduled to take effect on August 1. He also announced a 50% tariff on copper imports and floated the possibility of levies as high as 200% on pharmaceutical imports, though those measures would be delayed by 12 to 18 months to allow for industry adjustments. Market participants are also closely watching for progress on a potential US-EU trade agreement, with speculation mounting that a deal could be announced soon. In premarket trading, futures for the Euro Stoxx 50 and Stoxx 600 edged up 0.2% and 0.1%, respectively.

Producer prices in Norway decreased by 1% year-on-year in June 2025, slipping further from a 0.1% fall in the previous month. This marked the second consecutive month of deflation, amid lower prices for energy goods (-5.4% vs -3.9% in May) and extraction of oil and natural gas (-6.6% vs -7.5%). In addition, price growth slowed sharply for electricity, gas, and steam (12.9% vs 40.2%). Meanwhile, costs increased for manufacturing (1.8% vs 1.6%). Excluding energy goods, producer prices rose by 2.8% in June, the same pace as in the prior month. On a monthly basis, the PPI fell by 0.3%, easing from a 3% decline in May.

Malaysian palm oil prices hovered above MYR 4,660 per tonne, marking the third session of gains and holding at their highest in nearly three months. The bullish momentum was driven by strength in the Dalian exchange and a weaker ringgit. Also, production is expected to ease as palm trees enter their seasonal rest phase ahead of peak output in Q3. Meanwhile, exports strengthened, with June shipments up 4.3% to 4.7% from May, according to cargo surveyor data. At the same time, an Indonesian group warned that shipments to the U.S. may fall due to 32% tariffs on Indonesian goods, potentially giving Malaysia a trade edge. Demand from India—the top palm oil importer—remained strong, with June imports hitting an 11-month high amid competitive pricing. However, further gains were capped by weak data from China, where consumer prices edged up in June but producer prices shrank the most in near two years. Globally, U.S. President Trump reignited trade tensions with fresh tariff threats.

The S&P/NZX 50 index dropped 0.7% to close at 12,769 on Wednesday, retreating from an over seven-week high hit in the prior session, after the Reserve Bank of New Zealand paused its rate-cutting cycle. The RBNZ held its cash rate steady at 3.25% as widely expected, amid concerns that current inflation and global trade tensions could sustain price pressures. The pause follows six consecutive cuts since last August, totaling 225 basis points. However, policymakers indicated further cuts remain likely if inflation eases in line with the May forecasts. In corporate news, Citi downgraded a2 Milk to "neutral" from "buy," citing several datapoints that made the brokerage "incrementally" more cautious on the dairy producer’s near-term outlook. Shares of a2 Milk fell 4.1% to their lowest level since early April. Other notable decliners included Meridian Energy (-2.3%), Infratil (-1.5%), Port of Tauranga (-1.3%), and Fletcher Building (-3.5%). Property stocks also weighed on the market.

Top currency gainers are Australian Dollar (0.28%), Dollar Index (0.05%) and British Pound (0.01%). Biggest losers are Japanese Yen (-0.12%) and Euro (-0.09%).

The yield on the US 10-year Treasury note held above 4.4% on Wednesday after rising for five straight sessions, as investors evaluated the latest tariff measures unveiled by President Donald Trump. The president confirmed that the newly imposed duties targeting 14 countries would proceed as scheduled on August 1, with no revisions or delays. He also announced a 50% tariff on copper imports and indicated that more sector-specific tariffs could follow. In a more aggressive move, the president threatened to impose tariffs of up to 200% on pharmaceutical imports, though he noted that these would be delayed by 12 to 18 months to give the industry time to adjust. Market participants are now turning their attention to the upcoming release of the Federal Open Market Committee minutes for clues on the Federal Reserve’s next steps in monetary policy.

China’s 10-year government bond yield dropped to around 1.64% on Wednesday, following the release of mixed inflation figures. Annual consumer prices in June 2025 rose by 0.1%, breaking a three-month streak of 0.1% declines and surpassing market expectations of no growth. Despite this slight rebound in consumer inflation, the increase was modest, weighed down by ongoing challenges in the property market and renewed tariffs by US President Donald Trump. On the other hand, producer prices continued to slide, with a 3.6% year-on-year drop—worse than the forecasted 3.2% decline and deeper than May’s 3.3% decrease. This marked the 33rd consecutive month of producer deflation and the steepest contraction since July 2023. The sustained fall in producer prices underscores mounting economic strains as China grapples with sluggish domestic demand and growing uncertainty amid escalating global trade tensions.

The offshore yuan fell to around 7.18 per dollar on Wednesday, as investors reacted to the latest inflation data from China. Annual consumer prices rose 0.1% in June 2025, ending a three-month streak of 0.1% declines and beating market expectations of flat growth. Although consumer inflation modestly rebounded, the increase was minimal amid property sector stress and renewed tariffs from US President Donald Trump. Meanwhile, annual producer prices dropped 3.6%—worse than the anticipated 3.2% decline and steeper than May’s 3.3% fall. This marked the 33rd consecutive month of producer deflation and the sharpest drop since July 2023. The persistent decline in producer prices highlights mounting economic pressures as China struggles with weak domestic demand and uncertainty stemming from escalating global trade tensions. Externally, the yuan also came under pressure from a strengthening greenback amid intensified trade concerns following recent moves by the Trump administration.

Hong Kong shares fell 197 points, or 0.8%, to 23,953 around midday Wednesday, reversing gains from the previous session amid a modest drop in U.S. futures after U.S. President Trump escalated his global trade war by threatening a 50% tariff on copper and signaling upcoming levies on semiconductors and pharmaceuticals. In China, consumer prices rose slightly in June after four months of decline, indicating that deflationary pressures remained elevated. Meanwhile, producer prices saw their steepest drop in nearly two years amid intense competition among Chinese businesses, persistently weak domestic demand, and mounting tariff risks. Still, losses were limited by optimism that new company listings in Hong Kong will pick up in the second half of the year. Losses were almost broad-based, led by declines in property, tech, and consumer sectors. Notable laggards included Henderson Land Development (-8.8%), Sun Hung Kai Properties (-3.1%), Tencent Holdings (-1.6%), and SMIC (-1.5%).

The Japanese yen slipped past 147 per dollar on Wednesday, marking its third consecutive session of losses as trade negotiations between the US and Japan showed signs of strain, particularly over Japan’s rice market protections. The decline followed US President Donald Trump’s announcement of a 25% tariff on Japanese goods, set to take effect on August 1. Trump emphasized that there would be no revisions or delays to the newly imposed tariffs, which target 14 countries in total. Japanese Prime Minister Shigeru Ishiba called the latest measures “truly regrettable,” but affirmed Japan’s commitment to continue talks with Washington in search of a mutually beneficial resolution. Meanwhile, Bank of Japan board member Junko Koeda noted the central bank is closely watching for potential second-round effects on core inflation, particularly from rising food prices including rice.

Retail sales in Indonesia grew by 1.9% year-on-year in May 2025, rebounding from a 0.3% decline in April—the first annual drop since April 2024. The recovery was mainly driven by increased sales of food, beverages, and tobacco (4.0% vs 1.2% in April), as well as cultural and recreational goods (4.7% vs 3.6%). Meanwhile, sales growth eased for automotive parts and accessories (1.6% vs 8.7%) and fuel (5.3% vs 8.3%). Additionally, sales fell much less for household appliances (-5.8% vs -10.5%) and clothing (-0.3% vs -5.4%). Meanwhile, information and communication equipment continued to fall (-27.4% vs -25.1%). Looking ahead, retail sales in June are expected to grow by 2.0%, primarily supported by rising sales of fuel, automotive parts and accessories, and clothing. On a monthly basis, however, retail sales fell 1.3% in May, following a sharper 5.1% decline in April. The softer monthly contraction was partly due to increased spending during several holidays in May.

The New Zealand dollar rose toward $0.60 on Wednesday, rebounding from a two-week low, after the Reserve Bank of New Zealand paused its interest rate cutting campaign. The central bank held its official cash rate steady at 3.25% as widely expected, following six consecutive cuts since August 2024—when it rolled out its first rate reduction since March 2020. The central bank has taken a more cautious stance amid lingering concerns about domestic inflation, which currently at 2.5%, and rising risks that global trade tensions could add to inflationary pressures. But at the same time, policymakers said they expect to continue lowering rates in line with the May forecasts, assuming medium-term inflation continues to ease. Markets also anticipate ongoing economic weakness will give the RBNZ room to deliver at least one more rate cut later this year.

The Australian dollar held its recent gains to around $0.653 on Wednesday, supported by the Reserve Bank of Australia’s surprise decision to maintain interest rates at 3.85% on Tuesday. The decision came as most board members opted to wait for clearer evidence of slowing inflation. RBA Governor Michele Bullock stated at a post-meeting conference that persistent inflation risks remain, driven by high labor costs and weak productivity, which may push inflation above current forecasts. RBA Deputy Governor Hauser added that the central bank is closely watching US tariff developments, citing high global uncertainty. In the latest trade development, Trump ruled out further extensions to tariffs set for August 1 and announced sweeping new penalties, including a 50% tariff on copper imports, potential 200% duties on pharmaceuticals, and a 10% levy on goods from BRICS nations. Elsewhere, mixed inflation data in China, Australia’s top trading partner, also limited sharp movements for the Aussie.

The Shanghai Composite rose 0.4% to around 3,510, while the Shenzhen Component gained 0.5% to 10,640 on Wednesday, with Chinese stocks climbing to multi-month highs following the release of key inflation data. Consumer prices in China edged up 0.1% year-over-year in June, marking the first positive reading in five months and signaling tentative signs of stabilizing demand. However, producer prices plunged 3.6% — the steepest drop since July 2023 — as intensified price competition continued to weigh on the industrial sector amid weak domestic consumption. Geopolitical risks also lingered as Beijing warned Washington against reinstating tariffs on Chinese goods next month and threatened to retaliate against countries that align with US efforts to exclude China from global supply chains. Among notable gainers were Foxconn Industrial (up 1.2%), Contemporary Amperex (3.3%), and Zhongji Innolight (1.6%).

The Reserve Bank of New Zealand held its Official Cash Rate (OCR) unchanged at 3.25% during its July 2025 policy meeting, in line with market expectations and maintaining the lowest level since August 2022. The Monetary Policy Committee cited heightened uncertainty and near-term inflation risks as reasons to wait until August for further action. The annual inflation rate reached 2.5% in Q1 2025, remaining within the MPC’s 1–3% target range. While it is expected to near the upper end of the band in Q2 and Q3, easing core inflation and spare capacity in the economy should help return it toward the 2% midpoint over time. Meanwhile, New Zealand's economy contracted by 0.7% year-on-year in Q1 2025—slightly better than the expected 0.8% decline and an improvement from the 1.3% contraction in Q4 2024. Despite this modest recovery, the MPC expressed concern about the pace of the rebound, noting that ongoing uncertainty could prompt more cautious behavior from households and businesses.