Central Banks, Tariff News, and Corporate Earnings Vie for Market Attention – Currency Thoughts
Central Banks, Tariff News, and Corporate Earnings Vie for Market Attention
July 11, 2025
A fresh record high in the price of Bitcoin overnight of $118,661 was main eye-catching market development since yesterday’s closing time on the U.S. east coast. Even after retreating about $1000, crypto’s net overnight gain has been 1.5%. The rise since the U.S. election of Donald Trump has reached 70%, and Bitcoin is more than seven-fold more expensive now than at the end of 2022.
The dollar has risen 0.5% against the yen, 0.4% versus sterling, 0.3% relative to the loonie, but only 0.1% against the euro. U.S. tariff announcements have continued, and their 20-50% sizes in most cases has been not far different from those suggested early in April on Liberation Day.
The 10-year U.S. Treasury yield increased 4 basis points overnight, exceeding 1-bp comparable increase in Euroland and the U.K. and even the 2-bp increase of the 10-year Japanese JGB yield. Oil and gold prices each firmed about 1%. Investors aren’t persuaded by the Trump teams assertion that huge tariff hikes will have an inconsequential effect on inflation.
A variety of remarks by Fed officials and interest rate announcements from central banks in Egypt, Peru and Kazakhstan have also drawn interest. While Chicago District President Goolsbee supports a wait-and-see approach, Governor Waller reaffirmed a previously expressed desire to see the Fed consider an interest rate cut at this month’s scheduled FOMC meeting. San Francisco District President Daly made comments suggesting that she is in the process of moving from the wait-and-see to the previous minority wanting the next rate reduction to be done sooner rather than later.
The Central Reserve Bank of Peru maintained a 4.5% policy interest rate, warning that the “outlook for global economic activity has deteriorated due the restrictive measures on international trade, with a downward bias given the high uncertainty about its effects on the global economy. In this context, financial market volatility is still prevailing.” From a high of 7.75%, Peru’s rate was cut by a total of 100 basis points in 2023, 175 basis points last year, and twice more in January and May of 2025, all in increments of 25 basis points. Peruvian inflation of 1.7% currently remains below 2%.
Price stability has proven elusive in Egypt, and monetary authorities at the Central Bank of Egypt have been forced to impose a very restrictive stance. Their interest rate crested at 27.25% from March 2024 until a 225-basis point cut this past April that was followed up with a second reduction of 100 basis point a month later. With consumer price inflation (14.9%) still in double digit territory, no additional cuts from the 24.0% interest rate level have been made, including after today’s scheduled review.
The interest rate at the National Bank of Kazakhstan was also left unchanged today. Such had been lifted by a percentage point last November and an additional 125 basis points this past March to 16.5%, which represents the rate’s highest level since October 2023. Consumer price inflation in Kazakhistan of 11.8% last month represented a 21-month high. Officials are hoping the large interest rate hikes earlier this year will restore a disinflationary trend but are prepared to push their interest rate even higher if needed.
Among today’s data releases around the world, French CPI inflation in June got revised 0.1 percentage point higher to a5-month high but still lowly 1.0%. German wholesale prices in June were just 0.9% above their year-earlier level. CPI inflation last month in Serbia and Romania had higher readings (5.7% and 4.6%) compared to those in May.
British data out today depict floundering growth. Monthly GDP dipped 0.1% on top of a 0.3% drop in April and was just 0.7% highr than in May 2024. Industrial production in May fell 0.9% on month and 0.3% on year, while construction output fell 0.6% on month and posted the smallest year-on-year advance (1.2%) in four months. The goods and services trade deficit and goods only deficit in January-May of GBP 22.8 billion and GBP 102.9 billion were larger than a year earlier.
New Zealand’s manufacturing purchasing managers index had a sub-zero reading in June (48.8) for a second straight month.
Stronger-than-projected Canadian labor statistics in June were reported today. On-year growth in average hourly earnings slowed to a 40-month low of 3.2%, down from 3.5% in April and May and an end-2023 level of 5.65%. The jobless rate dipped back to April’s 6.9% level instead of edging higher as a majority of forecasters had anticipated, and employment jumped by 83.1K, almost nine times greater than May’s increase. This news comes at a bittersweet moment. After the thumbs-down given by Canadians to becoming America’s 51st state, Trump intends to impose a steep 35% tariff on its northern neighbor and long-time close ally.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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