There is one major driver in the capital markets today: A sharp drop in oil prices as the US and Iran have inexplicably not attacked for the past three nights. There is speculation in the press that the US decision was partly motivated by concerns over diminishing supplies of air defenses (e.g., Patriot interceptors) after the two-week assault, but the Trump administration played this down. prices are off 7-8% and this encouraged further unwinding of the rise in bond yields seen last week. Equities are rallying today and China’s CXMT chip maker IPO was launched in Shanghai today and it is the largest list company after today’s surge. It is big week for US tech earnings (MSFT and Meta on Wednesday and Apple and AMD on Thursday).
The was marked down initially early Asia Pacific trading but has not made much further progress. The continues to struggle to sustain gains above previous support (~$1.14), has not distanced itself convincingly from $1.33 support. The is struggled to sustain the recovery above $0.7000. The US dollar is above CAD1.4100. The dollar pulled back to about JPY163.35 but remains within striking distance of the 40-year high set last week near JPY164.
Prices
G10
• The euro consolidated at the lower end of last Thursday’s range ahead of the weekend. The range on Thursday, when the euro record an ostensibly bearish outside down day, may be key to the near-term outlook. The range that day was roughly $1.1365 to $1.1435. The euro held above $1.1375, where options for 1.3 bln euros expire today. The upside has been capped in front of $1.1420, and the euro is struggling to sustain the push above $1.1400, where another set of options for nearly 1.5 bln euros expires today.
• The dollar continues to hover within striking distance of the 40-year high reached against the last week near JPY164. Japanese officials could hike rates this week, intervene, and, possibly, secure US support. However, this seems little more than a remote tail risk. Still, the drop in oil prices and lower US yields has pushed the greenback slightly through JPY163.35, its lowest level since last Thursday’s high was recorded. US and Japanese officials have referred to the yen’s volatility, but the implied one-month vol reached a multi-year low week near 5.9%. It is now around 6.3%.
• Sterling snapped a six-day slide before the weekend and rose from almost $1.3300 to $1.3350. The gains have been extended to almost $1.3365 today. Still, more work needs to be done to boost confidence that a low is in place. Nearby resistance is seen in the $1.3375-$1.3400 area.
• The greenback made a marginal new high for the week against the on Friday, near CAD1.4115. On the midday pullback, the US dollar slipped to ~CAD1.4075 where buyers re-emerged. The US dollar held above CAD1.4070 earlier today but resurfaced above CAD1.4100 in late European morning turnover. Nearby resistance is seen in the CAD1.4125-55 band.
• The held support before the weekend near $0.6965 and recorded in the session high near midday in NY, ever so slightly above $0.7000. The Australian dollar was one of two G10 currencies to have risen against the greenback last week; the other being the Norwegian krone. It is firm today and is trying to establish a foothold above $0.7000, which it has settled above one in the past nine sessions despite trading above it on an intraday basis. Last week’s high was a little shy of $0.7030, where options for almost A$600 mln expire today.
EM
• Currencies from Latam accounted for three of the top five emerging market currencies last week. The Colombian peso rose 1.3% for second place behind the South Korean won. The Brazilian real rose almost 1%, while the Russian ruble appreciated by 0.60%. The Mexican peso’s nearly 0.4% gain put it in fifth place. Before the weekend, the US dollar consolidated against the peso within the previous day’s range. The peso is firmer today, amid the stronger risk appetites but it remains within last Thursday’s range (~MXN17.3775-MXN17.5400).
• The dollar slipped against the before the weekend but held above the previous day’s low (~CNH6.7675). The broadly heavier greenback fell to a four-day low against the offshore yuan near CNH6.7650, today. It was confined to a CNH6.7635-CNH6.7790 range last week. The PBOC set the dollar reference rate lower today (CNY6.7911 vs CNY6.7939 at the end of last week).
• A combination of lower oil prices and aggressive intervention by the Reserve Bank of India, helped lift the by a little more than 0.7% today. It is the largest gain since early June. RBI Governor Malhotra indicated that the central bank’s measures to attract foreign capital with subsidized rates have drawn around $32 bln. The controversial education minister resigned over the weekend. The dollar gapped lower and fell to around INR95.7840, a two- week low and frayed the 20-day moving average (~INR95.81) for the first time in more than three weeks but settled above it.
Other Markets
• The pressure on the AI and chips was still evident before the weekend. The Nasdaq fell to a new low since early May, and although it recovered, the intraday bounce was sold and the composite finished lower for the third consecutive session and the sixth in the past seven. However, the de-escalation of tensions, at least for the moment, and the sharp drop in oil prices are boosting equities today. The large bourses in the Asia Pacific region rallied but Taiwan. China’s CXMT (important chip maker) surged by more than 450% at its is Shanghai debut today and is the largest onshore-listed company. Europe’s Stoxx 600 is about 0.7%, and US index futures are 1.0%-1.6% higher.
• Benchmark 10-year yields slumped ahead of the weekend as oil pulled back. The 10-year US Treasury yield slipped for the first time in five session last Friday, and the yield of the two-year note fell for the first time in seven sessions. Most European 10-year yields fell by 3-5 bp, but the 10-year UK Gilt outperformed with a seven-basis point pullback. Yields continue to fall today. The 10-year JGB slipped by one basis points, but in Europe, benchmark yields are off mostly 4-7 bp, led by Italy and France. The 10-year US Treasury yield is off four basis points (to almost 4.63%) and the two-year is off three basis points to 4.30%.
• Gold recovered from a three-day low before the weekend and settled above the 20-day moving average (~$4070). The yellow metal rose by about 1.4% last week. It gapped higher today. Today’s low is slightly below $4083.80, while the pre-weekend high was a little above $4082. Still, last week’s high is still a distance away at $4166. Silver rose by about 5% last week after losing more than 10% in the previous two weeks. It rose a little more than 2% before the weekend, the fifth advance in six sessions. It, too, gapped higher today and poked through $60 but could not sustain it and it is near $59 in late European morning activity.
• September WTI reached $93.50 on July 23 and pulled back to about $87.70 before the weekend. Reuters reported that Pakistan was exploring ways to resume peace talks between the US and Iran. There have been no strikes over the last couple of days. Without an explanation for either side, it allows speculation to fill the gap. The contract finished a little more than 8.5% higher last week but is off nearly 7.8% ahead of the North American open. Sept WTI gapped lower today and continued to decline. It reached a low slightly above $82 today. The halfway mark of the rally since early this month is around $80.30.
Data
• Helped by stronger Boeing orders, June are expected to have rebounded from May’s 4.5% drop. Boeing orders rose to 121 from 27 in May and deliveries edged up to 64 from 60. Excluding defense and aircraft orders, the median forecast in Bloomberg’s survey is for a 0.9% increase after 1.4% gain in May. Durable goods orders rose by an average of 1.5% a month in H1 25 and a 1.5% increase in June would put the H1 26 average at about 0.9%. While the FOMC’s decision on July 29 is a highlight, two days later the US publishes the first estimate of Q2 GDP. The median forecast in Bloomberg’s survey is for a 2.3% annualized pace (2.1% Q1 26). The Atlanta Fed’s tracker says 1.7%.
• Mexico reports June trade figures today. Mexico’s trade balance has improved markedly. In the first five months of 2025, Mexico recorded a trade surplus of almost $920 mln. In the Jan-May 2026 period, its trade surplus is $5.77 bln. Mexico’s Q2 GDP will be reported Thursday, and the median forecast in Bloomberg’s survey is for 0.6% growth quarter-over-quarter after a contraction of that magnitude in Q1 26.
• The markets showed little reaction to steady eurozone money supply growth (M3 3.3% year-over-year vs 3.0$ in May)). The ECB’s Q2 bank survey warned that credit supply and demand may weaken even if at a slower pace than in the previous three months. In June, lending figures were largely in line with May. The first estimate of the region’s Q2 GDP is due Thursday and the median forecast in Bloomberg’s survey is for a 0.2% quarter-over-quarter increase after a flat Q1.
• Germany’s July IFO business survey showed an improvement in expectations that was greater than the deterioration of the current assessment, and this helped lift the overall measure of the business climate. At 86.6, perceptions of the business climate were the strongest since February, when the Middle East war began.
• Japan’s producer service prices slowed last month to 3.2% (from a revised 3.4% from 3.3% initially). The BOJ meets later this week and is widely recognized to be on hold until possibly October. Ahead of the meeting, Tokyo’s July CPI will be reported. The core is expected to remain below 2% and underscores the lack of a compelling case for faster rate hikes.
• China’s June industrial profits rose 15.1% year-over-year in June, down from 21.1% in May. A breakdown showed profit-growth in tech related industries slows. Furniture and automakers reported significant drops in earnings, according to reports. The Politburo meets this week, and many observers anticipate more stimulative measures.
