Countdown to Tariff Thursday

Global markets enter the final stretch before the August 1 tariff trigger. Sunday’s U.S.–EU accord, locking a 15 % import duty on most European goods, removed the darkest tail risk but left plenty of haze. Asia, Canada, and Brazil still need deals, and Stockholm’s U.S.–China talks could determine whether a 90day reprieve materializes. Every communiqué, leak, or presidential post between now and Thursday night can swing currencies and Treasuries in a heartbeat.

The MonetaryPolicy Triad

Fed Decision (Wednesday)
With rates firmly at 4.25 %–4.50 %, the Fed is in watchandwait mode. Traders care about two things: whether the statement highlights tariffdriven inflation, and if Chair Powell echoes Governor Waller’s plea for “insurance” cuts. A pressconference hint that “risks are becoming twosided” could knock the dollar index below 95; a reiteration that inflation remains “uncomfortably high” lifts frontend yields.

BoJ Outlook (Thursday)
Governor Ueda must defend ultraeasy policy despite CPI sticking above 3 %. Markets will parse the quarterly Outlook Report: an upward tweak in FY 2026 inflation or talk of a smaller bondpurchase envelope would fire up yen bulls. Conversely, pledging to maintain yieldcurve control keeps USD/JPY flirting with 150.

BoC Hold (Wednesday)
Ottawa’s decision is overshadowed by U.S. events, yet Governor Macklem’s remarks on elevated shelter inflation could pivot USD/CAD. Should the BoC mention the possibility of “additional firmness” if wages persist, the loonie’s threeweek uptrend resumes.

Macro Calendar Highlights

| Day | Release | Why It Matters |
| — | — | — |
| Tue | U.S. Consumer Confidence, JOLTS | Gauge on labour churn and sentiment before payrolls |
| Wed | Australia Q2 CPI | Direct input to 6 Aug RBA meeting |
| Thu | U.S. Advance GDP, Core PCE, ISM Mfg | Triple test of growth, prices, and factory pulse |
| Fri | U.S. NFP, Unemployment, Wages | Single mostwatched data point for Septembercut odds |

Europe’s docket is quieter but telling: German flash CPI on Wednesday will reveal whether energy passthrough offsets tariff repricing; a hot print keeps Bund yields lofty.

Politics and Policy Noise

Tokyo’s ruling coalition lost its upperhouse majority, and whispers say Prime Minister Ishiba could step aside after the BoJ meeting. Political churn might accelerate yen volatility. In Washington, Trump hailed a “terrific chat” with Powell on Friday—readers of Fed history know such public praise can turn on a dime, injecting additional headline risk into Wednesday’s presser.

Commodities and OPEC+

A Monday OPEC+ ministerial checkin should greenlight the final 548 k bpd output boost for August. Cartel language about “monitoring demand risks” will set the tone for Brent’s $66$70 trading band. Gold’s retreat to $3,340 reflects waning fear, but if the tariff clock runs out without deals, bullion could scale last month’s $3,400 peak.

Earnings Thread the Needle

Big Tech begins to report: Alphabet will reveal whether ad budgets remain robust, and Tesla faces scrutiny over robotaxi rollouts and Chinese factory margins. Defense names Lockheed and General Dynamics benefit from surging NATO orders. Watch forward guidance—mentions of “tariff passthrough” or “supplychain insurance” can reset equity multiples.

CrossAsset Positioning

CFTC data shows leveraged funds still long euro and pound, short yen. Any hawkish Powell cue or dour Chinese statement could squeeze those trades. MXN remains the sweetheart of the carry crowd; but remember August is seasonally ugly for EMFX when U.S. policy uncertainty spikes.

Tactical Playbook

• FX: Sell EUR/USD rallies toward 1.18 unless PMI rebounds; buy dips into 1.16 if Fed surprises dovish.
• Rates: Fade rallies in twoyear Treasuries above 4 % until payrolls confirm deceleration.
• Equities: Own quality defensives; rotate out of cyclical smallcaps ahead of ISM data.
• Commodities: Keep a tight leash on crude longs until OPEC+ clarity; gold callspreads cheap ahead of tariff deadline.

Sleeper Catalysts

1. Politburo Statement: A bold Chinese stimulus vow could ignite copper, Aussie, and mining shares.
2. Canada GDP Surprise: A negative print would reignite BoC cut bets and sink CAD.
3. U.S. Government Funding Squabble: Lateweek headlines on debtceiling negotiations could inject fragility.

Conclusion

This is arguably 2025’s densest macro week: three heavyweight central banks, a wall of firsttier U.S. data, and a tariff deadline that could still morph into compromise—or chaos. If Stockholm delivers an extension and the Fed stays resolutely patient, markets may extend the summer meltup. But any misstep—hot PCE, Powell hawkish tilt, or tradetalk stalemate—would release the volatility coiled beneath today’s placid surface. Fasten seat belts; the ride from Monday’s open to Friday’s closing bell promises to be anything but smooth.