A. Narrative in a Nutshell

Tariff brinkmanship set the cadence. Monday opened with a fresh 25 % duty salvo at Tokyo and Seoul; Tuesday upped the ante with a jaw-dropping 50 % levy on copper, rippling through base-metal curves and FX carry books alike. By Thursday, Trump vowed still more letters—this time aimed at Brazil and select BRICS states—only to soften the blow on Friday by punting hard decisions to August 1. Markets translated every proclamation into yield lurches, volatility spikes, and ultimately a modest dollar pullback as week-end book-squaring set in.

The Fed’s communications muddied the waters: minutes showed a board divided between “insurance” cutters and status-quo hawks. Simultaneously, public remarks from Daly and Waller sketched a dovish safety net, while Musalem played inflation hawk, calling tariff impacts a 2026 story. Investors responded by toggling fed-funds bets between one and two cuts by December, a swing visible in euro-dollar option skew.

B. Foreign-Exchange Scorecard

The U.S. unit felt like a yo-yo: DXY printed three-day highs Tuesday before slumping 0.25 % into Friday’s close. Yen strength resurfaced as JGB/UST spreads compressed; USD/JPY’s failure to sustain 146.90 (see USD/JPY chart, page 2, 11 July) telegraphed exhaustion. Euro traders survived a Thursday scare to reclaim altitude, buoyed by option-expiry magnets around 1.18 and hopes that Eurozone retail sales and PMI rebounds will offset German order pain. Sterling finished little changed; forward curves imply the BoE will shadow the Fed but with fewer total 2025 cuts. 

C. Commodities & Real Assets

Copper was the week’s firework—Comex limit-up moves spoke louder than words. Oil, by contrast, chopped sideways, caught between supply-tightness math and fears of demand destruction if the tariff web broadens. Gold’s gentle drift higher—documented in sequential XAU/USD panels—reflected steady haven demand and a break-even-inflation wobble under 2 %. 

D. Rates, Credit & Equities

Treasury auctions cleared smoothly, underscoring a thirst for duration despite headline risk. Still, the curve’s mid-week flattening highlighted latent growth concerns after German orders plunged 1.4 % m/m (July 7 brief). Equities rotated daily—on Tuesday commodity names surged with copper; Wednesday tech recouped Monday’s drawdown; Friday saw defensives in vogue as the dollar eased. European bourses under-performed, dragged by industrial cyclicals.

E. Event Horizon — Risk Matrix

• August 1 Tariff Trigger: The binary on/off decision will dictate whether DXY retests three-year highs or relents.
• Fed Chair Succession: Treasury Secretary hints at Powell’s possible replacement; governance uncertainty can widen front-end swap spreads. 
• China Policy Response: PBOC inquiries into dollar weakness hint at calibrated FX defence; any decisive move could jolt EM carry trades. 
• German Manufacturing Slump: A second month of negative orders would challenge euro bulls and fuel talk of ECB re-easing.

F. Playbook & Positioning

FX desks favour selling USD rallies, especially versus yen and Swiss franc, while owning euro topside gamma into PMI week. Bond strategists advocate tactical 2-yr versus 10-yr flatteners to hedge a hard-landing pivot. In commodities, upside copper skew pays for itself if Asia retaliates; gold remains the ballast. Equity investors maintain a barbell: long energy/metals for tariff upside, balanced by utilities and telcos for shock absorbers.

G. Closing Reflection

A week that began with tariff bombs and ended with a hesitant retrace reminds us markets now price politics in milliseconds but digest policy in weeks. The dollar gyrated, yields ricocheted, and yet risk assets eked out net gains—proof that liquidity is still abundant. The lesson? Position for noise, but anchor on fundamentals: growth is slowing, inflation lingers, and policy credibility is the coin of the realm. Until those vectors align decisively, expect more chess moves on the tariff board—and more zig-zags on your screens.