The non-farm report has triggered expectations of interest rate cuts. Will Fed officials change their faces urgently? Trump's new tariffs will take effect on August 7

Starting Monday, market risk sentiment was biased towards optimism, as reports of breakthroughs in EU and U.S. trade triggered a sharp rise in global markets. As a result, the dollar was strongly sought after, while the euro and yen fell significantly as U.S. trade positions improved and capital rotations flowed into U.S. dollar assets.

Mid week, the FAP meeting kept interest rates unchanged as expected, but its tone was not as dove-like as the market hoped. As the Fed did not signal a rate cut in September, interest rate futures were quickly repriced, which puts the dollar further higher and puts pressure on global risky assets. This move continues the already ongoing rise of the US dollar.

Forex Market:The US dollar index rose sharply this week, mainly due to the US reaching a trade agreement with the EU and other countries, better-than-expected GDP and other U.S. economic data, Fed Chairman Powell's press conference was interpreted as hawks, and the market cut expectations for a rate cut this year. As of Thursday, the US dollar has closed higher for six consecutive trading days and returned to the 100 integer mark, hitting a new high since the end of May. However, weaker than expected non-farm data on Friday led to market repricing twice a year, with the US dollar returning to below 99, falling sharply by more than 100 points in 15 minutes, closing at 98.66 this week, narrowing to 1.03%. In terms of non-US currencies, the strong US dollar once caused the trend of non-US currencies to be sluggish. The British pound and the Australian dollar both recorded six consecutive declines against the US dollar, the euro and the US dollar recorded five consecutive declines against the US dollar, and the US dollar recorded an increase against the Japanese yen.

Gold Market:Spot YellowGold fell under pressure as the dollar strengthened. Among them, gold prices fell below the $3,270 mark on Wednesday, and the largest single-day decline in more than a month. Gold rebounded slightly on Thursday and Friday, and after non-farm, it rose directly to $40, erasing all previous losses and closing at $3,363 per ounce this week, up 0.79%.

Crude Oil Market: International oil prices closed higher this week, for the first time in three weeks, mainly because Trump advanced the ultimatum on Russia-Ukraine to August 8, and the global trade situation showed signs of easing. On Friday, it was reported that OPEC+ is expected to approve a new round of production increase on Sunday, and oil prices plummeted by more than 3%.

Review of the week's news

1. The Federal Reserve did not cut interest rates, Trump angrily criticized it as "too stupid", and the two directors opposed one director's resignation

The Federal Reserve kept interest rates unchanged for the fifth consecutive time at its July meeting, maintaining the target range of the federal funds rate between 4.25% and 4.5%. This move was once again attacked by Trump.

The Fed's policy statement said that although inflation has fallen from a high level, it is still above the target level of 2%, the employment market remains stable, while economic growth slowed down in the first half of the year, and uncertainty remains prominent. The Federal Reserve emphasized that its goal is to achieve maximum employment and a long-term inflation rate of 2%, and future interest rate adjustments will depend on the latest economic data, outlook changes and risk balance.

It is particularly noteworthy that at this meeting, directors Waller and Bowman voted to immediately cut interest rates by 25 basis points, breaking the tradition of "zero votes" for more than 30 years.

After the meeting, Chairman Powell said that the current policy interest rate is restrictive and is enough to cope with the uncertainty brought about by tariffs and inflation. This statement has significantly cooled the market's expectations for a rate cut in September.

Powell stressed that it is too early to judge the long-term impact of tariffs on inflation, and prices are transmitted slower than expected, and the Federal Reserve needs to avoid short-term impacts that evolve into continuous inflation. In addition, although GDP data shows slowing economic growth and the employment market still performs well, supply and demand situations show potential downward risks.

Trump then again lashed out at Powell on social media, calling him "angry, stupid and politicized" and unworthy of being the chairman of the Federal Reserve, accusing him of losing trillions of dollars in the United States, and criticizing the headquarters renovation project as "the most corrupt in history." Former www.xmserving.commerce Secretary Ross believes that these attacks may exacerbate the Fed's policy toughness and is unwilling to cut interest rates due to external pressure.

Trump criticized Powell again before the non-farm farm on Friday, saying that he was a stubborn idiot and must now significantly lower interest rates. If he continues to refuse (rate cuts), the board should take over control and do what everyone knows must do!

At the same time, U.S. Treasury Secretary Becent revealed that a list of candidates for the Fed chair is being prepared for the president and the chief of staff, which is expected to be announced before the end of the year. Powell's term will end in May next year, with a vacancies at the time of the board and the candidates will enter the interview stage.

On Friday, Waller and Bowman, who voted against, posted a message to explain the reason. Bowman said that economic growth slowed down, the labor market showed signs of weakness, inflation was approaching its target, and interest rate cuts could hedge the risk of further economic weakness and protect the labor market. She stressed the importance of early action to avoid worsening the labor market and further slowing the economy.

Waller believes that tariffs only lead to one-time price increases and will not trigger sustained inflation. Current economic data shows that monetary policy should be close to neutral rather than tightening. He also pointed out that the labor market is facing downward risks and advocates immediate interest rate cuts rather than waiting. Despite different views, he still believes that the wait-and-see attitude is too cautious and may lead to policy lag.

What is even more dramatic is that Federal Reserve Director Coogler suddenly announced his resignation, has submitted his resignation to Trump, and will step down on August 8 and return to Georgetown University to serve as a professor. She has absent from the Fed's interest rate meeting this week, and her position was originally scheduled to be vacant in January next year.

Kugler's resignation provides Trump with the opportunity to appoint a director in advance, and the new director may put pressure on Powell or even take over his position. Therefore, traders continued to increase their bets on the Fed's interest rate cut in September.

2. Weak non-agricultural farmers ignited expectations of interest rate cuts. Trump angrily criticized the fraud of data and fired the Statistics Director.

Data released on Friday night showed that the United States recorded 73,000 non-agricultural soldiers in July, the smallest increase since October last year. The unemployment rate recorded 4.2%, rebounding from the previous month. The corrections in May and June are much larger than usual, with a total of 258,000 people down.

After the data was released, traders www.xmserving.completely digested the two interest rate cuts in the United States before the end of the year. Traders believe that the possibility of the Federal Reserve cutting interest rates by 25 basis points in September is 75%, www.xmserving.compared with 45% before the non-farm report was announced.

After the non-farm data was released, Trump posted on social media that the latest non-farm employment data were manipulated in order to embarrass him and the Republicans. He mentioned that employment data had abnormalities around the 2024 presidential election, when beautiful data were released for three days before the election, but on November 15, 2024, after the election, these data were significantly revised downward.

So, he said the team had been directed to fire Erika McEntarfer, the Director of Labor Statistics, and believed that Powell should also "retire" because the economy was thriving under his leadership.

Early, data released by the United States on Wednesday showed that the annualized growth rate of real GDP in the second quarter reached 3%, a sharp rebound from 0.5% in the first quarter, mainly benefiting from the 5 percentage points contribution of net exports, while the net exports dragged down in the first quarter.

However, after excluding the tariff factor, the growth momentum is not strong. Consumer spending increased by only 1.4%, the slowest since the epidemic, and corporate investment has also slowed down significantly. Economists point out that quarterly volatility mainly www.xmserving.comes from inventory and trade. At the beginning of the year, enterprises imported early due to tariffs, which increased imports in the first quarter and lowered GDP. However, imports in the second quarter fell by 23%, which not only offset the effect in the first quarter, but alsoA further decline, exports fell by only 2.5%, which greatly boosted GDP.

Economists are more concerned about the demand indicator of domestic private final purchases, which increased by only 1.2% in the second quarter, the weakest since the end of 2022.

Trump said after the data was released: "GDP was just released in the second quarter, 3%, far better than expected! 'Mr. Too Chi' must now lower interest rates. There is no inflation! Let people buy houses and refinance it for this!"

In terms of inflation, the core and overall PCE price index in the United States in June were higher than market expectations, mainly driven by rising www.xmserving.commodity prices, and the costs of household goods, sports equipment and clothing rose, indicating that import tariffs were partially passed on to consumers, and consumer spending was almost stagnant.

3. Trump announced the imposition of 10-41% reciprocal tariffs on dozens of countries

On July 31, local time, US President Trump signed an executive order to impose "reciprocal tariffs on multiple countries and regions, with tax rates ranging from 10% to 41%.

Trump said he was satisfied with the newly implemented high tariff policy, saying that its progress was "very smooth and very stable." He mentioned that countries that fail to reach an agreement by the August 1 deadline will not be able to avoid the new tariff rate that will take effect next week, but there is still a possibility of reaching an agreement in the future.

Countries are divided into three categories: countries with www.xmserving.commodity trade deficits with the United States, with a tariff of 10%; countries with an agreement or a moderate www.xmserving.commodity trade surplus with the United States, with a tariff of about 15%; countries with no agreement and a large www.xmserving.commodity trade deficit with the United States, with a higher tariff.

This statement was released a few hours before Trump's own "reciprocal" tariffs came into effect. He had previously suspended the implementation of the tariffs twice to leave time for negotiations. However, the new tariffs will not take effect until August 7, rather than August 1, which once again gives countries another window to try to lower tariffs through negotiations.

In addition, Trump fulfilled his previous threat to raise tariffs on exported goods to Canada from 25% to 35% from Friday, but the goods covered by the US-Mexico Free Trade Agreement are not listed here. The White House said the tariff increase was the result of Canada's "continuous inaction and retaliation."

This week, after months of difficult negotiations, the United States and the European Union reached a trade agreement a week before Trump's original tax increase came into effect. According to the agreement, most EU goods exported to the United States (including automobiles) will face a 15% tariff, but key areas such as drugs and chips are also included. The EU agreed to add $600 billion in investment in the United States, purchase $750 billion in US energy products, and open a zero-tax market to US goods. In addition, the EU will also purchase a large amount of US military equipment.

After the US-EU trade agreement was reached, France strongly opposed it, believing that the agreement was imbalanced and the EU should not surrender to the United States. French Prime Minister Belu criticized the EU for "surrender", and European Affairs Minister Haddad pointed out that the agreement was "imbalanced" and emphasized that Europe cannot be "the last fool." Although Germany is dissatisfied with the agreement, it believes it avoids itThe trade war escalated.

Trump announced on Wednesday that India will pay a 25% tariff starting August 1. In addition, Trump plans to impose an additional "punishment" on India as it purchases Russian military equipment and energy, but specific details have not been released. Trump accused India of excessive tariffs on social media, calling it "one of the highest in the world" and criticizing India for its heavy and disgusting barriers to non-monetary trade.

Trump also announced on Wednesday local time that he had reached a trade agreement with South Korea. Under the agreement, the United States will impose a 15% tariff on South Korea's goods imported to the United States, while South Korea promises to invest $350 billion in the United States and purchase $100 billion in liquefied natural gas or other energy products.

The South Korean President's Office later stated that the United States has lowered South Korean automobile tariffs from 25% to 15%, and South Korea will not be worse than other countries on chip and drug tariffs, and the rice and beef market will not be open to the United States.

Trump has also announced an additional 50% tariff on most Brazilian goods to oppose the "political persecution" against former Brazilian President Bolsonaro, and at the same time exempts additional tariffs of 40% in industries such as aircraft and energy. The effective date of tariffs will be postponed from August 1 to August 6.

Brazil's finance minister said the final result was milder than expected. Brazil's foreign minister stressed that Brazil is willing to restart negotiations on tariff issues, but Bolsonaro's legal issues should not be included in the negotiations.

The U.S. government also announced this week that it will suspend tax-free treatment for low-value packages worth $800 and below starting from August 29, 2025. According to the executive order signed by Trump, parcels sent to the United States through channels other than the international postal network will be subject to all applicable tariffs.

Trump also issued an ultimatum to 17 multinational pharmaceutical giants on Thursday, demanding that they take measures to reduce U.S. drug prices within the next 60 days and submit specific price cuts by September 29. These pharmaceutical www.xmserving.companies include AbbVie, Amgen, AstraZeneca, Boehringer Ingelheim, Bristol-Myers Squibb, Eli Lilly, Merck Serono, Genentech, Gilead, GlaxoSmithKline, Johnson & Johnson, Merck, Novartis, Novo Nordisk, Pfizer, Regeneron and Sanofi.

4. Trump's tariff exemption from refined copper, US copper futures plummeted 20%. On July 30, the US copper market suffered its largest single-day decline in history, and the price of copper futures in the New York Stock Exchange plummeted 20%. The White House announced that it would impose a 50% tariff on imported semi-finished copper products from August 1, but refined copper (i.e. cathode copper) is excluded from the tax scope. The decision caught the market off guard after traders generally expected tariffs to apply to all refined copper imports.

According to the White House statement, 50% import tariffs will apply to semi-finished products such as copper pipes, copper wires, copper rods, copper plates, as well as copper-intensive products such as pipe fittings, cables, connectors and electronic www.xmserving.components. Products with low processing levels such as copper ore, concentrate, sulfonium, cathode copper and anode copper are not taxed.

ThisIn addition, copper tariffs implemented under Article 232 of the Trade Expansion Act will not overlap with automobile import tariffs. The White House also requires that 25% of the high-quality scrap and raw copper produced in the United States must be sold domestically, but this requirement may not have a substantial impact in the short term, as about 40% of scrap copper and 75% of copper concentrate in the United States have been processed domestically.

However, the prospect of import tariffs for refined copper has not www.xmserving.completely disappeared. The Ministry of www.xmserving.commerce recommends that import tariffs be imposed on refined copper starting from 2027, and the tax rate will gradually increase from 15% to 30% in 2028. Trump has directed the Secretary of www.xmserving.commerce to provide updates on the U.S. copper market by the end of June 2026 to decide whether to implement such phased tariffs.

As New York copper prices plummeted, traders urgently booked storage space on the London Metal Exchange (LME), hoping to divert copper originally shipped to the United States to the LME warehouse. The capacity of LME warehouses in New Orleans was quickly booked out and new copper stocks could not be received within the next three months.

This sharp turn in tariff policy ended what the copper industry calls "the most profitable arbitrage transaction in its career." Traders face a dilemma: either pay high logistics costs to transfer copper within the United States or bear the same huge costs to re-export it.

5. Gaza is in a "hunger storm", and the U.S. special envoy visits the Gaza Strip in a serious humanitarian crisis due to the war, and the number of deaths from famine continues to rise. The images of hungry children shocked the world and triggered international criticism from the international www.xmserving.community for the deterioration of humanitarian conditions in Israel.

Trump said on Monday that many people in the Gaza Strip are starving, Israel has a significant responsibility for the circulation of aid and many lives could have been saved. Trump promised to set up a "fenceless and borderless" food center, and said the United States will work with other countries to provide more humanitarian assistance to Gaza people, including food and sanitation facilities.

British Prime Minister Stamer warned Israel that if the humanitarian crisis in Gaza continues to worsen, the UK will recognize the Palestinian state at the United Nations General Assembly in September. Canadian Prime Minister Carney also announced that Canada will recognize the Palestinian state in September and join the ranks of Britain and France.

Israel cut off aid to Gaza since early March, saying the move was to force Hamas to release hostages and restore aid from May under new restrictions. Hamas accused Israel of using hunger as a weapon, while Israel said it was abide by international law but had to prevent the misappropriation of aid by militants, and blamed Hamas for the suffering of the Gaza people.

Israeli Prime Minister Netanyahu claimed last Sunday that there was no famine in Gaza, but changed his words on Monday that the situation in Gaza was "difficult" and said it was working to ensure the entry of aid supplies. Netanyahu's office issued a statement saying that Israel will continue to work with international institutions and US and European countries to ensure a large amount of humanitarian aid enters the Gaza Strip.

Amid the deadlock in the ceasefire negotiations and the intensified humanitarian crisis, U.S. Special Envoy for the Middle East Steve Witkov visited Canada on FridaySands, develop new aid allocation plans. The action is led by the Trump administration and aims to alleviate the ongoing deteriorating humanitarian crisis in Gaza. Witkov will travel to the region with U.S. Ambassador to Israel Mike Heckabee and report to Trump after the mission is over.

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