Morning Wrap (22.07.2025)

Tuesday's session remains calm. Indices are mixed, Japan and Australia are slightly down, while Chinese indices post slight gains. Major currency pairs stayed within narrow ranges, with the Japanese yen being the weakest currency in the first part of the day.

Investor sentiment was muted due to mixed macroeconomic and geopolitical signals. The market lacked significant catalysts.

The RBA minutes indicate that further rate cuts are possible, but the bank is focused on their timing and scale. Most members supported keeping the rate at 3.85%, citing persistent inflation and a tight labor market.

Three of the RBA's nine board members supported a rate cut, pointing to progress in combating inflation and weak GDP. The majority favored a pause, citing improved data and still-restrictive policy.

The board expressed concerns about easing too quickly, especially amid U.S. trade uncertainty. The minutes confirm the bank’s cautious and data-dependent approach.

New Zealand posted a trade surplus of NZD 142 million in June, but exports declined quarter-on-quarter for the first time in nearly two years. The annual trade deficit now stands at NZD 4.37 billion. Despite the monthly surplus, export weakness raises concerns about economic growth.

The People’s Bank of China set the yuan’s reference rate 175 pips stronger than expected — the highest level since November 2024.

Donald Trump warned he would consider military strikes if Iran escalates its nuclear activities. He emphasized that his approach is meant to be deterrent in nature. This continues his hardline rhetoric toward Tehran.

A Japanese representative met with U.S. Commerce Secretary Lutnick in Washington, but talks yielded no progress. They were described as candid but lacking in specifics. Both sides remain far from an agreement.

Despite Trump’s assurances, reports suggest that no even limited U.S.–India trade deal will be reached by August 1st. India has not yet received formal notification of tariffs. Disputed areas include steel, aluminum, automotive, and agriculture. A broader agreement may be postponed until autumn.