Morning Wrap (02.07.2025)

Asian markets are having a generally calm session. The main indexes are seeing moderate gains in the range of 0.00–0.60%, with the biggest increases in Japan and Australia. The U.S. dollar is rebounding slightly.

Retail sales in Australia rose by just 0.2% m/m in May, below the forecast of 0.4%, indicating continued pressure on consumer spending. This marks the fourth month of weak results, with food sales notably declining. Annual growth slowed to 3.3%—the weakest pace since November 2024. These figures strengthen expectations for a potential rate cut by the RBA at the July 7–8 meeting.

Building permits rose by 3.2% m/m in May, below the forecast of 4.8%, but still a rebound from April’s -5.7%. Year-on-year growth stood at +6.5%. The data remains volatile but points to a tentative recovery in construction. The AUDUSD rate dipped slightly after the weaker retail data, though the move was part of a broader U.S. dollar strengthening.

Trump announced on social media that Israel has accepted a proposal for a 60-day ceasefire in Gaza. The next step is up to Hamas, with mediation efforts supported by Qatar and Egypt.

Canada’s ambassador in Washington stated that the country remains ready to fully lift tariffs imposed since Trump’s presidency as part of ongoing negotiations with the U.S. Prime Minister Carney has set July 21 as the deadline to reach a new economic and security agreement.

According to Reuters, the U.S. has temporarily halted deliveries of some missiles and precision weapons to Ukraine due to concerns over shrinking stockpiles. This may affect operational capacity on the front lines.

Goldman Sachs predicts that the June U.S. jobs report could be a turning point for the dollar, especially if it reveals labor market weakness. The ADP report is due today, followed by the NFP report tomorrow.

In an interview with Fox, Bessent expressed confidence that the Fed will cut rates by September, or possibly sooner. He expressed surprise that tariffs haven’t already prompted easing. His comments align with Trump’s political rhetoric and market expectations for policy loosening.