Trade tensions escalate, inflation concerns weigh on gold

US tariffs hit Canada, NZD falls after CPI, and gold dips amid Middle East risks, while JPY shows intraday strength.

Geopolitical and macro impacts

• President Trump announced new tariffs, including a 50% duty on certain Canadian products such as alcohol, dairy, and automobiles. According to Carney, Canada is ready to intensify trade discussions following these new US tariffs.
• Gold prices fell, nearing $4,000, as reported US-Iran tensions fueled concerns about inflation, after President Trump vowed Iran "will pay" for US deaths.

Currency movements and data

• The New Zealand dollar spent much of the session as the weakest major, but a hotter-than-expected Q2 CPI — up 4.1% year-on-year versus 4.0% forecast and 1.5% quarter-on-quarter versus 1.4% — reinforced the case for further RBNZ rate hikes and helped the Kiwi recover.
• On an intraday basis, the Japanese yen ranks as the strongest major currency, despite reports suggesting it remains "trapped in a stalemate." FXStreet analysts note the GBP/JPY uptrend has stalled, with a target break of 219.
• Both the British pound and the Australian dollar struggled; the pound has experienced a three-day slide, greeting the new Prime Minister, while the Australian dollar is described as "knocking on a door that no one opens."
• The US dollar strengthened against the Swiss franc, with USD/CHF recovering above 0.8100, showing a bullish market structure for the pair.

Key events today

• GBP · Claimant Count Change: SCHEDULED — forecast 29.4K, previous 31.2K
• GBP · Average Earnings Index 3m/y: SCHEDULED — forecast 4.5%, previous 4.4%

Our proprietary metrics show market readiness (MRS) at 59 and market sentiment (FSI) at a neutral 58. The carry trade score (CTS) remains high at 80.