Second Quarter GDP Data Starts to Trickle In – Currency Thoughts

Second Quarter GDP Data Starts to Trickle In

July 29, 2025

The Federal Open Market Committee begins a 2-day interest rate policy review today that is widely expected to leave the 4.25-4.5% federal funds target range unchanged in spite of relentless calls by President Trump for substantial rate reduction. Of particular interest will be whether Governors Waller and Bowman, who have verbally expressed support for lowering rates sooner rather than later, formally dissent from the majority.

Meanwhile, financial markets continue to digest the U.S.-EU trade deal, which is generally considered more favorable to the United States than Europe, as well as the implications of so many governments, including those of Canada, Mexico and India that have not completed trade deals with the Trump Administration. The dollar is generally 0.1-0.2% firmer than at the close of trading yesterday and touched a 5-week high against the euro. Stock markets have risen in Europe where many recent corporate earnings reports proved better than anticipated. Also, the trade deal with the U.S. at least dampens uncertainty and frees up business to now proceed with future plans. U.S. stock futures were up around 0.5% a little more than two hours before today’s opening bell. In Asia, Japan’s Nikkei lost 0.8%, and other markets closing in the red included those in Taiwan, Hong Kong and Singapore. However, the resumption of U.S.-China trade negotiations in Stockholm has generated hope that their trade war truce might be extended. The Shanghai Composite index rose by 0.3% today.

The price of bitcoin has risen 0.4%, while those of gold and oil show little net change. Ten-year sovereign debt yields are a tad softer.

Another source of investor interest today has be the report of a few countries’ second-quarter GDP figures. These are a precursor to the first looks later in the week at both U.S. and Euroland growth during April-June.

• Spanish GDP climbed 0.7% on quarter and matched the first-quarter’s 2.8% one-year high in year-on-year growth. These latest results slightly exceed expectations. The year-on-year comparison is also close to average Spanish growth in 2023-2024 and beats America’s recent on-year growth.
• Belgian GDP rose 0.2% between 1Q and the second quarter, which was just half as much as in the previous quarter. But on-year growth of 1.0% lay midway between 1.1% in 1Q and 0.9% in the second quarter of 2024. Although low, Belgian growth has now stayed positive since the first quarter of 2021, and the latest result narrowly surpassed expectations.
• Finnish growth flat-lined in quarterly terms during each quarter of the first half of 2025, and year-on-year growth slowed to a one-year low of 0.5%.
• Swedish GDP rebounded from a 0.2% quarterly slide in 1Q but, at just +0.1%, by not as much as anticipated. On-year growth of 0.9% matched the prior quarter’s result.

Among other data released this final Tuesday of July, Austria’s manufacturing purchasing managers index stayed under 50 as such has since August 2022 but rose to a 2-month high of 48.2, suggesting a slower rate of contraction. Confidence in the future, moreover, was its best since the Russian invasion of Ukraine.

Mortgage approvals in Great Britain of 64.2k last month exceeded expectations and their year-earlier level by 5.6%.

Retail sales in Spain jumped 1.1% in June and recorded their greatest year-on-year advance (6.2%) in 41 months. In Latvia, retail sales rebounded 0.7% in June, reversing May’s drop, and posted a 6-month high 1.4% increase from a year earlier.

Singaporean producer price deflation was less deep at -3.7% in June.

The National Bank of Kyrgyzstan left its policy interest rate unchanged at 9.0%. Year-on-year consumer price inflation of 8.0% was still above its 5-7% target range. The rate has not been cut since a back-to-back 200 basis points reductions in April and May of 2024 and compares to a peak of 14% from August through November of 2022. In explaining today’s decision, a statement says

Assessment of the external and internal inflation factors indicates that the annual inflation rate will form within the medium-term target of 5-7 percent by the end of the current year. Taking into account price volatility in the global food and commodity markets, planned revision of the tariff policy of the state, as well as with a view to further reducing inflationary expectations of the population, it is considered necessary to keep the policy rate of the National Bank unchanged at 9.00 percent.

Today’s U.S. data menu includes housing prices and an early-bird estimate of the latest monthly merchandise trade deficit.

Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: National Bank of Kyrgyzstan

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on Tuesday, July 29th, 2025 at 5:22 am and is filed under New Overnight Developments Abroad – Daily Update.
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