- US stock markets were closed for Independence Day.
- USD mildly softened amid gains in its major counterparts and with US participants away for the Fourth of July celebrations.
- Israeli PM Netanyahu told US President Biden he has decided to send a delegation to continue negotiations on hostages but reiterated that Israel will only end the war after achieving all of its objectives, while the US believes there is a significant opening for a hostage deal
- Looking ahead, highlights include South Korean Current Account, Japanese Household Spending, Foreign Reserves & Leading Index, Philippines CPI, Singapore Retail Sales, UK General Election Results.
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LOOKING AHEAD
- Highlights include South Korean Current Account, Japanese Household Spending, Foreign Reserves & Leading Index, Philippines CPI, Singapore Retail Sales, UK General Election Results.
- Click for the Newsquawk Week Ahead.
US TRADE
- US stock markets were closed for Independence Day.
FX
- USD mildly softened amid gains in its major counterparts and with US participants away for the Fourth of July celebrations.
- EUR gradually strengthened throughout the session and reclaimed the 1.0800 handle which continued to show dissenting views on rate cuts and highlighted the need for continued caution and patience regarding the future disinflation path.
- GBP traded steadily on election day with the Labour Party widely anticipated to achieve a landslide victory.
- JPY strengthened against the greenback but with the downside in USD/JPY cushioned by support around the 161.00 level.
COMMODITIES
- Oil prices were relatively flat on the day after two-way trade and with optimism regarding Israel-Hamas negotiations after a positive response from Hamas which prompted Israel to send a delegation to Qatar, while Saudi Arabia reduced its premiums to Asia but raised them for North West Europe and the US.
- Saudi Arabia set Arab light crude OSP to Asia at plus USD +1.80/bbl vs Oman/Dubai average (prev. +2.40 M/M), to NW Europe at USD +4.00/bbl vs Ice Brent (prev. +3.10), to the US at USD +4.85/bbl vs ASCI (prev. +4.75), according to Reuters.
- Chevron (CVX) announced it was removing non-essential personnel from its Gulf of Mexico facilities due to approaching Hurricane Beryl but noted that production from its Gulf of Mexico assets remains at normal levels, according to Reuters.
- China has asked state oil firms to stockpile 8mln metric tons of crude for state reserves with the program covering July-March 2025, according to Reuters citing sources.
GEOPOLITICAL
MIDDLE EAST
- Israeli PM Netanyahu told US President Biden he has decided to send a delegation to continue negotiations on hostages but reiterated that Israel will only end the war after achieving all of its objectives.
- US senior administration official said President Biden and Israeli PM Netanyahu walked through the draft Israel-Hamas agreement in a 30-minute call and the US believes there is a significant opening for a hostage deal, while the official stated that the Hamas response moves the process forward and could provide basis for closing a deal on hostages and ceasefire. Furthermore, the US official said outstanding issues relate to the implementation of an agreement in which there is significant work to be done and a deal is not likely to be closed in a period of days but they have had a breakthrough on the critical impasse in Israel-Hamas talks.
- Israeli PM Netanyahu approved sending Israeli negotiators for detailed negotiations after the Hamas response to the Gaza hostage and ceasefire deal, according to Axios's Ravid. It was separately reported that the Hamas response and changes to the deal were sufficient to move forward in the talks and a key change is that Hamas is no longer demanding a full Israeli withdrawal during the first stage of the deal which would involve the release of some hostages in Gaza during a six-week cease-fire, according to WSJ.
- Israel’s Mossad chief Barnea is travelling to Doha to resume Gaza ceasefire and hostage talks which will likely take place on Friday and will meet with Qatar’s PM in an effort to bring Israel and Hamas closer to a Gaza peace deal, according to a source cited by Reuters.
- Israeli official confirmed that the Mossad chief will lead a hostage negotiations delegation and another official said there is a real chance for a deal, while it was also stated that the proposal put forward by Hamas includes a very significant breakthrough and the official stated that they can proceed with a deal but it depends on PM Netanyahu.
- Israel's Channel 12 reported that the Defence Minister told prisoners' families that they are closer than ever to concluding an exchange deal, according to Al Jazeera.
- Hezbollah said it launched over 200 rockets and targeted five Israeli military sites, while it also stated that it will attack new sites in Israel. However, Israeli media stated the Hezbollah attack is a limited development and under control, according to Al Arabiya.
OTHER
- Russian President Putin said they will not announce a ceasefire and need to see irreversible steps from Ukraine, while they are ready to begin production of intermediate-range missiles and reserve the right to mirror the actions of the US. Furthermore, Putin said regarding arms treaties with the US, that proposals have been declared but goodwill is needed, while constructive dialogue with the US is impossible now and have to wait for the election.
- Russian warship reportedly met with Chinese warships for joint sea patrols, according to TASS.
ASIA-PAC
NOTABLE HEADLINES
- Chinese Premier Li said the country is willing to promote AI to better serve global development together with other countries.
- China's MOFCOM said they are to continue an anti-dumping probe into EU port imports, while it noted several consultations have been held at a technical level between China and the EU regarding EV tariffs.
- EU confirmed it is to move ahead with planned tariffs on Chinese EVs in which provisional duties are to take effect on July 5th. In relevant news, EU VP Dombrovskis said they do not see any basis for a China retaliation regarding EU tariffs on Chinese EVs and talks with China are ongoing, according to Bloomberg TV.
EU/UK
NOTABLE HEADLINES
- BoE Monthly Decision Maker Panel data showed one-year ahead expected CPI inflation fell by 0.1 percentage points to 2.8% in June and the three-month average fell by 0.1 percentage points to 2.9% in June, while one-year ahead expected wage growth fell by 0.3 percentage points to 4.2% on a three-month moving-average basis in June and annual wage growth was 6.0% in the three months to June which is unchanged from the three months to May.
- ECB Minutes stated that almost all agreed to lower rates by 25 basis points and a dissenting view was upheld which maintained that the incoming data since the last meeting and upside risks to inflation did not support the case for a rate cut. Furthermore, they agreed it was important to convey the increased confidence in the disinflationary process that had justified the policy decision, while it highlighted the need for continued caution and patience regarding the future disinflation path and continued determination to bring inflation back to target in a timely manner.
- ECB's Lane said they still have some concerns over domestic inflation and the wage tracker shows much lower growth in 2025 and 2026, while he added that firms are saying that wage pressures are easing.
- French Election IFOP Poll for LCI shows far-right National Rally (RN) to win 210-240 seats, left-wing New Popular Front (NFP) to win 170-200 seats and Macron's centrists seen to win 95-125 seats (289 seats needed for an absolute majority).
DATA RECAP
- UK S&P Global Construction PMI (Jun) 52.2 vs. Exp. 53.6 (Prev. 54.7)
- EU HCOB Construction PMI (Jun) 41.8 (Prev. 42.9)
- French HCOB Construction PMI (Jun) 41.0 (Prev. 43.4)
- German HCOB Construction PMI (Jun) 39.7 (Prev. 38.5)
- German Industrial Orders MM (May) -1.6% vs. Exp. 0.5% (Prev. -0.2%)
