\u201cAs mentioned, given the low number of high impact financial releases from the US on the calendar, fundamentals may lead the greenback in the coming week. Should a more hawkish tone be used by Fed policymakers we may see the USD gaining some ground. On a more fundamental level, the US President is expected to continue to be unexpected and could enhance uncertainty in the markets.\u201d<\/em><\/p>\n\n\n\n On a macroeconomic level, we note the unexpected jump of the UK CPI rates for June, beyond market expectations, both on a core as well as on a headline level. It\u2019s characteristic that the headline rate accelerated at levels not seen in one and a half years and the release highlighted the intensification of inflationary pressures in the UK economy. On the other hand, the UK employment data for May were mixed, with the employment change figure reaching the stellar 134k while at the same time the unemployment rate ticked up to 4.7%. The rates and figures regardless of how unexpected they were, provided little movement for cable, while the pound continues to gain against the JPY and losing ground against the EUR for the week. In the coming week we may see the CBI releases getting some attention as could the preliminary PMI figures for July, with special interest of pound traders for the services sector. Should the indicators\u2019 readings rise, implying a faster expansion of economic activity could in turn possibly provide some support for the pound. Also the release of the UK retail sales for June next Friday could weigh on the sterling should it show an even deeper contraction of the rate, as it could imply a wider weakening of the demand side of the UK economy.<\/p>\n\n\n\n On a fundamental level, we maintain our worries for the outlook of the UK economy. Especially on a fiscal level, the prospect of the UK Government proceeding with tax rate hikes and spending cuts could weigh on the UK economy. Furthermore, a possible tightening of the UK government\u2019s fiscal policy, could ease inflationary pressures, yet at the same time that would mean hardship for the population. Should market worries intensify over the UK economic outlook, we may see them weighing on GBP.<\/p>\n\n\n\n On a monetary level, we note that the market\u2019s expectations for BoE to proceed with a rate cut in its next meeting, remain even after the unexpected acceleration of the CPI rates for June. Furthermore GBP OIS imply that the market expects the bank to proceed with another rate cut, if not in the November meeting, then in December. Hence the market\u2019s expectations continue to lean on the dovish side and should we see BoE policymakers actually expressing views that may be deemed as more hawkish than what the market expects, we may see the pound getting some support.<\/p>\n\n\n\n Analyst\u2019s opinion (GBP)<\/em><\/p>\n\n\n\n \u201cFinancial releases may continue to feed interest in the coming week for the pound but monetary policy market expectations for BoE to continue ease its monetary policy further could weigh on the pound. Also on a fundamental level, worries for the UK macroeconomic outlook could weigh on the pound.\u201d<\/em><\/p>\n\n\n\n On a fundamental level, the election of the House of Councillors in Japan on Friday may prove to be critical for the stability in the Japanese political scene. The ruling coalition is reported to be facing tough opposition in the elections for Japan\u2019s upper House and may lose the majority. In such a scenario we may see the JPY weakening as the political outlook of Japan becomes uncertain. A possible win of the opposition may add more pressure on BoJ to keep rates unchanged in contrast to the bank\u2019s efforts to tighten its monetary policy. It should be noted that the elections take place in the midst of US President Trump\u2019s trade wars at which the US has targeted Japanese products entering US soil with higher tariffs. Trump\u2019s tariffs tend to maintain the risks for growth of the Japanese economy on the downside thus any escalation could possibly weigh on JPY.<\/p>\n\n\n\n On a macro level, we note the trading surplus for June and the improvement of the machinery orders growth rate for May, yet the main release for the week, may have been June\u2019s CPI rates. The slowdown of Japan\u2019s CPI rates for the past month both at a headline as well as at a core level, which may be contradicting BoJ\u2019s narrative and seems to have dissolved currently the market\u2019s expectations for a rate hike at end of the year. In the coming week we note the release of the preliminary PMI figures for July but also note the release of Tokyo\u2019s CPI rates also for July, which could serve as a preview for inflationary pressures in the Japanese economy as a whole.<\/p>\n\n\n\n On a monetary level, we note the market\u2019s expectations for BoJ to keep its policy unchanged in its next meeting at the end of July and as mentioned above expects the bank ot maintain rates unchanged until the end of the year, implying that the market\u2019s hawkish expectations have been erased. Analysts tend to note the possibility that the bank may revise upwards its forecast for inflation, which may renew the possibility of a rate hike at the end of the year. Yet the bank\u2019s hawkish intentions seem to fail to clip the dynamic of JPY bears.<\/p>\n\n\n\n Analyst\u2019s opinion (JPY)<\/em><\/p>\n\n\n\n \u201cIt should be noted that the Japanese currency is losing ground across the board for weeks now and JPY fundamentals seem to continue to feed the bears. We highlight the House of Councillors elections on Sunday as a key risk event for JPY. Also the second issue that could move the JPY would be Trump\u2019s trade wars and a possible escalation of the tensions in the US-Japanese trade relationships could weigh on JPY .\u201d<\/em><\/p>\n\n\n\n On a macro level for the EUR, we note the improvement of Germany\u2019s ZEW indicators for July, a release that noted the improvement both on the outlook but also the conditions on the ground for the largest economy in the Euro Zone. We also note the verification of the acceleration of June\u2019s HICP rate, which nevertheless remains at the ECB\u2019s inflation target of 2.00%yy. In the coming week, we highlight the release of the preliminary PMI figures for July of the Euro Zone, Germany and France, with Germany\u2019s manufacturing sector being the most interesting. Overall should we see the PMI indicators rising implying an improvement of economic activity in the Zone we may see the EUR getting some support as the release would brighten the macroeconomic outlook of the Zone.<\/p>\n\n\n\n The main event for EUR traders in coming week\u2019s calendar may be ECB\u2019s interest rate decision next Thursday. The bank is widely expected to remain on hold and currently EUR OIS imply a probability of 95.2% for such a scenario to materialise. EUR OIS also currently implying that the market expects the bank to cut rates one more time this year, in the October meeting. Hence we may say that a slightly dovish inclination of the market\u2019s expectations exist and market attention may turn towards the bank\u2019s forward guidance. Should the bank maintain a dovish tone in the accompanying statement and ECB President Lagarde\u2019s following press conference, it could enhance the market\u2019s expectations for further easing of the bank\u2019s monetary policy and thus weigh on the common currency. On the flip side, a hawkish tone implying that the bank is prepared to keep rates at their current levels for longer, contradicting the market\u2019s expectations we may see the EUR getting some support.<\/p>\n\n\n\n On a fundamental level we note the instability of the French political scene as French PM Bayrou is about to introduce measures improving productivity, including the scrapping of two national holidays. France is facing tough choices as the country is running a budget deficit of 5.8%, while the EU\u2019s limit is 3% and the country\u2019s national debt has surpassed its GDP. The issue tends to be considered as bearish for the common currency at the time and any intensification of the market\u2019s worries about it could weigh on the EUR. Another issue that tends to tantalise EUR traders would be the US 30% tariffs on European products, announced by US President Trump. The EU Commission seems to be mulling countermeasures of EU tariffs on US products entering the EU, which are to focus on manufacturing products such as aircraft, a development that could adversely affect Boeing. For the time being the EU Commission seems to be pausing any thoughts for countermeasures as Germany\u2019s Chancellor Merz is advising caution. In general any escalation in the frictions of the US-EU trade relationships could weigh on the EUR and vice versa.<\/p>\n\n\n\n Analyst\u2019s opinion (EUR)<\/em><\/p>\n\n\n\n \u201cWe highlight the release of ECB\u2019s interest rate decision as the key event for EUR traders in the coming week and a possible hawkish tone could provide substantial support for the EUR. On a fundamental level, the instability in the French political scene could weigh on the EUR as could also any intensification of the frictions in the US-EU relationships. On a macro level we may see the release of the preliminary PMI figures for July generating substantial interest among EUR traders.\u201d<\/em><\/p>\n\n\n\n On a macro level, the main event for Aussie traders in the past few days was the release of Australia\u2019s employment data for June. The employment change figure despite rising marginally, failed to reach the market\u2019s expectations, negatively diverging substantially, while at the same time the unemployment rate rose to 4.3% if compared to May\u2019s 4.1%. Overall the data implied an easing of the Australian employment market, which in turn may add pressure on the RBA to ease its monetary policy and understandably weighed on AUD. In the coming week we note the release of the preliminary PMI figures for July which could generate some interest among Aussie traders.<\/p>\n\n\n\n On a fundamental level, Trump\u2019s trade war against China tends to weigh on the Aussie given also the close Sino-Australian economic ties. It should be noted that Chinese data releases over the past few days were mixed, as China\u2019s trade surplus widened and the industrial output growth rate accelerated, yet the urban investment growth rate and retail sales growth rates slowed down implying an easing in economic activity of the chinese construction sector and the demand side of the Chinese economy, all being for June. Also the GDP rate for Q2 slowed down yet remained above 5%. Yet US President Trump\u2019s trade wars tend to weigh on the Aussie given also the markets\u2019 perception that the AUD is riskier asset in the FX market given its commodity currency nature.<\/p>\n\n\n\n On a monetary level, we note that despite RBA\u2019s latest interest rate decision to remain on hold, the market seems to expect the bank to deliver three rate cuts until the end of the year, a signal of substantial dovish expectations for the bank\u2019s policy. Coming Tuesday we note the release of RBA\u2019s July meeting minutes and should the document show dovish intentions by the bank\u2019s policymakers we may see the Aussie losing ground, while should they seem prepared to delay further any rate cuts, we may see the Aussie getting some support as the market may have to readjust its dovish expectations. We also note RBA Governor Bullock\u2019s speech next Thursday where she is expected to provide more clarity for the bank\u2019s intentions.<\/p>\n\n\n\n Analyst\u2019s opinion (AUD)<\/em><\/p>\n\n\n\n \u201cThere are only few financial data from Australia that could affect the Aussie in coming week\u2019s calendar. On a monetary level, a more dovish stance by RBA could weigh on the Aussie, as could any intensification of uncertainty at a global level.\u201d<\/em><\/p>\n\n\n\n On a macroeconomic level, we highlight the acceleration of Canada\u2019s CPI rates for June both on a headline as well as on a core level, with the headline rate being at tolerable levels and the core rate being a bit more worrisome. A positive surprise was the unexpected rise in the number of House starts for June and Canada\u2019s business barometer for July. In the coming week, we highlight the release of Canada\u2019s May retail sales. Should we see the rate accelerating we may see the Loonie getting some support as the release would imply a strengthening of the demand side of the Canadian economy. Also we note the release of June\u2019s PPI rates and an intensification of inflationary pressures at a producers\u2019 level could provide some support for the CAD.<\/p>\n\n\n\n On a fundamental level, the tensions in US-Canadian trade relationships tend to be a bearish factor for the Loonie. Given also the announcement of US President Trump that the US is to impose 35% tariffs on Canadian products beginning August 1st and Canadian PM Carney\u2019s statement that any trade deal between the US and Canada is unlikely not to include any tariffs the issue becomes even more important and its characteristic that the Looney has been weakening against the USD over the past two weeks. Any intensification of the tensions in the US-Canadian trade relationships could weigh on the Loonie and vice versa. Also oil prices seem to be breaking a two week winning streak, which in turn may not weigh as such on the CAD yet in any case does not bode well for the Loonie, given Canada\u2019s status as a major oil producing economy.<\/p>\n\n\n\n On a monetary level, the acceleration of Canada\u2019s CPI rates for June tends to take out of the picture a possible rate cut by BoC in its next meeting, end of July, as the CPI rates advise caution. Yet the market currently expects the bank to proceed with a rate cut at the end of year. There seem to be no planned speeches by BoC policymakers in the coming week, yet should the market\u2019s expectations for the Bank to maintain rates at the current stage for longer intensify, we may see the Loonie getting some support.<\/p>\n\n\n\n![\"\"](\"\/wp-content\/uploads\/2025\/07\/image-85.png\")
<\/figure>\n\n\n\nGBP \u2013 June\u2019s Inflation jumped unexpectedly<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/07\/image-86.png\")
<\/figure>\n\n\n\nJPY \u2013 House of Councillors elections make JPY nervous<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/07\/image-87.png\")
<\/figure>\n\n\n\nEUR \u2013 ECB\u2019s interest rate decision in focus<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/07\/image-88.png\")
<\/figure>\n\n\n\nAUD \u2013 Easing of Australia\u2019s employment market weighed on AUD<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/07\/image-89.png\")
<\/figure>\n\n\n\nCAD \u2013 May\u2019s retail sales of interest for Loonie traders<\/h2>\n\n\n\n
![\"\"](\"\/wp-content\/uploads\/2025\/07\/image-90.png\")
<\/figure>\n\n\n\n