Morning Wrap (05.08.2025)

6:40 AM 5 August 2025
  • The U.S. dollar strengthened against most currencies. Particularly weak in the first part of the day were the Swiss franc, Australian dollar, and New Zealand dollar.

  • Japanese trade negotiator Akazawa is returning to the U.S. to finalize details of the new agreement, with further talks expected.

  • San Francisco Fed President Mary Daly stated that two interest rate cuts in 2025 remain appropriate, although a decision in September is still uncertain. She acknowledged that the labor market is weakening and that the Fed “can’t wait forever” to act. In her view, the impact of tariffs on inflation will be limited, and policy should remain data-dependent.

  • Goldman Sachs forecasts that the Fed may cut rates in September—potentially by as much as 50 basis points—if unemployment spikes sharply. The base case assumes three 25 bp cuts by year-end. The key factor will be the labor market report; a rising unemployment rate could accelerate the easing cycle.

  • The minutes from the Bank of Japan’s June meeting were largely outdated but confirmed a cautious approach to policy normalization. Members noted that inflation is exceeding forecasts but stressed the need to assess trade risks and corporate profits. Despite uncertainty, the BoJ intends to continue hiking if data confirms its projections.

  • Japan’s final services PMI rose to 53.6 in July, supported by strong domestic demand despite a decline in export orders. Employment growth slowed due to labor shortages and tight budgets. Price pressures eased across the economy. The composite PMI rose to 51.6, with services remaining the main driver of growth.

  • China’s private S&P services PMI rose to 52.6 in July, the highest since May 2024. Growth was supported by strong domestic and export demand, especially in tourism. Employment increased more rapidly, and companies raised prices for the first time in six months due to higher input costs. However, the composite PMI fell to 50.8 due to weaker manufacturing.

  • The U.S. Commodity Futures Trading Commission (CFTC) announced its intention to allow spot cryptocurrency trading on CFTC-registered futures exchanges.

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