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BoJ holds at 0.50%, lifts 2025 inflation projections sharply on food costs

    By
    ActionForex
    -

    The BoJ kept its short-term policy rate unchanged at 0.50% as expected, reaffirming its cautious stance in the face of growing external risks. While the central bank reiterated its intention to continue normalizing policy in light of improving economic and price conditions, it also cited heightened uncertainty around global trade and policy developments as justification for a steady hand.

    In its latest quarterly outlook, the BoJ sharply raised its inflation forecasts. Core CPI for fiscal 2025 was lifted from 2.2% to 2.7%. Core-core CPI, which excludes both fresh food and energy, jumped from 2.3% to 2.8%. The upward revisions were largely attributed to food price increases, though the BoJ still sees underlying inflation remaining subdued in the first half of the forecast horizon.

    For fiscal 2026, core CPI was revised slightly higher from 1.7% to 1.8%, and core-core CPI from 1.8% to 1.9%. Projections for fiscal 2027 remained unchanged at 2.0% for both measures. The Bank noted that inflation will pick up toward levels “generally consistent” with the price stability target in the second half of the projection period.

    Growth outlooks were little changed. The fiscal 2025 GDP forecast was lifted modestly to 0.6% from 0.5%, while estimates for fiscal 2026 and 2027 were held at 0.7% and 1.0%, respectively. The Bank continues to expect a slow but steady recovery, supported by resilient domestic demand and improvements in global conditions.

    BoJ emphasized that the risk balance for growth remains tilted to the downside for 2025 and 2026, though price risks are now broadly balanced.

    Full BoJ Outlook for Economic Activity and Prices.

    Fed Powell’s caution cools September cut bets, stocks end mixed

      By
      ActionForex
      -

      U.S. stocks ended mixed overnight after the Fed held its policy rate steady at 4.25–4.50%, in line with market expectations. The dissenting votes from Governors Christopher Waller and Michelle Bowman in favor of a cut came as little surprise, reflecting known dovish leanings. However, Chair Jerome Powell’s tone in the press conference struck a more cautious chord than markets had anticipated.

      Powell pushed back against speculation of a near-term pivot, stating firmly, “We have made no decisions about September.” That effectively left the door open, but offered little for those hoping for imminent easing. Powell also warned that while tariff-driven inflation may be transitory, “more persistent” effects couldn’t be ruled out.

      Between now and the next FOMC meeting, two additional rounds of jobs and inflation reports will be released—giving the Fed a wider lens to assess policy needs.

      Traders responded by paring back bets for a September cut. Market pricing now sees just a 43% chance of easing at the next meeting, down from 65% a day earlier. The message: the Fed may be approaching the end of its pause, but it’s not ready to blink just yet.

      Technically, while S&P 500’s up trend continued this week, it’s clearly continuing to lose upward momentum as seen in bearish divergence condition in D MACD. 6500 psychological level is likely to cap upside and bring consolidations. That’s slightly above a major fibonacci level of 61.8% projection of 3491.58 to 6147.43 from 4835.04 at 6476.35. Break of 6281.71 support will indicate that a near term correction has already started towards 55 D EMA (now at 6110.15).

      Fed holds steady, dissenters Waller and Bowman call for cut

        By
        ActionForex
        -

        Fed held interest rates unchanged at 4.25–4.50% as widely expected, but a rare split emerged within the Committee. Governors Michelle Bowman and Christopher Waller dissented, voting in favor of a 25bps cut. Their push to begin easing suggests that internal debate is intensifying, even as the broader Committee maintains a cautious stance.

        The statement offered few surprises, characterizing economic activity as having “moderated” in the first half of the year. Labor market conditions remain “solid” with “low” unemployment, while inflation remains “somewhat elevated.”

        Fed reiterated its vigilance toward risks on “both sides of its dual mandate”, but stopped short of signaling a policy shift.

        Full FOMC statement here.

        BoC keeps powder dry, signals easing if tariff impact deepens

          By
          ActionForex
          -

          BoC left its policy rate unchanged at 2.75% as expected, but opened the door to future easing. In its statement, the central bank noted that if economic weakness continues to weigh on inflation and upward pressures from trade disruptions are contained, “there may be a need for a reduction in the policy interest rate.”

          The Canadian economy is reeling from recent U.S. tariffs. After a strong Q1, likely driven by pre-emptive export surges, GDP is projected to have shrunk -1.5% in Q2. The BoC sees a modest rebound in H2, forecasting 1% growth under the current trade conditions. But the path ahead diverges sharply depending on whether the trade standoff worsens or eases. A tariff escalation scenario would seen the Canadian economy “contracts through the rest of this year”.

          Inflation is expected to remain close to 2% in the current tariff scenario. While de-escalation could ease price pressures, higher tariffs and rising supply-chain costs pose upside risks. Businesses are already reporting increased expenses as they adjust sourcing strategies—raising the potential for broader consumer price impacts.

          Full BoC statement here.

          US GDP surges 3.0% annualized in Q2, inflation gauges ease

            By
            ActionForex
            -

            US GDP growth accelerated to 3.0% annualized in Q2, far above expectations, as falling imports and firmer consumer spending powered the expansion. These gains were partially offset by weaker investment and exports, though the data suggest domestic demand remains firm.

            Notably, inflation pressures eased significantly. The PCE price index rose just 2.1% in Q2, down from 3.7% in Q1, while the core PCE gauge slowed to 2.5% from 3.5%.

            Full US Q2 GDP advance release here.

            US ADP jobs grow 75k, ongoing labor market resilience

              By
              ActionForex
              -

              U.S. private payrolls grew 104k in July, beating expectations of 75k and suggesting continued strength in the labor market. Gains were broad-based, with 31k new jobs in goods-producing industries and 74k in services. Hiring was evenly spread across firm sizes, with both medium and large companies contributing 46k each.

              Wage pressures held steady, with pay up 4.4% yoy for job-stayers and 7% for job-changers, unchanged for the fourth consecutive month.

              ADP’s Chief Economist Nela Richardson noted the data points to “a healthy economy” as employers grow more confident in consumer resilience.

              Full US ADP employment release here.

              Eurozone GDP beats with 0.1% qoq growth, but Germany and Italy contract

                By
                ActionForex
                -

                Eurozone GDP grew 0.1% qoq in Q2, slightly above market expectations of flat growth, while the broader EU expanded 0.2% qoq. On a year-over-year basis, GDP rose 1.4% yoy in the Eurozone and 1.5% yoy in the EU—marking a mild deceleration from Q1’s annual pace of 1.5% yoy and 1.6% yoy respectively. .

                Spain led the quarter with a strong 0.7% qoq gain, followed by Portugal (0.6%) and Estonia (0.5%). However, Germany and Italy both posted marginal contractions of -0.1%, and Ireland saw the largest drop at -1.0%. Despite the mixed quarterly results, all member states reported positive year-on-year growth.

                Full Eurozone GDP release here.

                BoC to hold fire again, September cut still in play

                  By
                  ActionForex
                  -

                  BoC is widely expected to hold its overnight rate steady at 2.75% today, marking a third consecutive pause in its rate-cut cycle. The slight improvement in the labor market, with unemployment edging back down to 6.9% in June, gives the central bank breathing space to maintain its current stance. However, core inflation pressures remain stubborn, with CPI common stuck at 2.6%, far from the bank’s comfort zone.

                  With policy already sitting in the neutral range, the BoC is likely opting for a wait-and-see approach, especially given ongoing trade uncertainties and the potential for delayed tariff pass-throughs to consumer prices later in the year. While underlying growth concerns persist, there’s a case for keeping policy steady until inflation dynamics become clearer.

                  Markets continue to expect further easing this year. A Reuters poll shows that nearly two-thirds of economists forecast a 25 basis point cut in September, followed by another by year-end. That would bring the policy rate down to 2.25%, aligning with weakening demand and persistent disinflation pressures if they materialize.

                  Technically, considering bullish convergence condition in D MACD, USD/CAD’s break of 55 D EMA this week suggests that it might already be correcting the whole fall from 1.4791. Further rebound is likely in the near term. Though, strong resistance should emerge below 1.4014 (38.2% retracement of 1.4791 to 1.3538 at 1.4017 to limit upside.

                  Dollar loses momentum ahead of Fed’s potential dovish tilt

                    By
                    ActionForex
                    -

                    Fed is widely expected to keep interest rates unchanged 4.25–4.50%. Markets have priced in over a 97% chance of a hold, making the decision a foregone conclusion. However, the markets would watch out for any dovish signals from the Fed, which could put pressure on the Dollar, particularly if policy language starts to point more clearly toward a September cut.

                    Key to the announcement will be whether dovish members like Governors Christopher Waller and Michelle Bowman begin to shift their rhetoric into formal dissent— casting votes for an immediate cut. If additional policymakers join them, markets will likely interpret it as confirmation that a policy pivot is nearing. Fed Chair Jerome Powell’s tone in the post-meeting press conference will also be crucial in guiding expectations into the fall.

                    Currently, futures markets see a roughly 65% chance of a rate cut in September. Any softening in Powell’s stance or language around tariff uncertainty and inflation could raise those odds.

                    Economic data released ahead of the Fed will help set the stage. A 2.4% annualized Q2 GDP print is expected, following Q1’s surprising -0.5% contraction. However, this strength is largely technical, driven by a reversal in imports following tariff-related stockpiling in Q1, rather than an underlying surge in domestic activity.

                    Technically, USD/JPY’s rebound from 145.84 lost momentum ahead of 149.17 resistance. Intraday bias is turned neutral first. On the upside, firm break of 149.17 will resume whole rally from 139.87 and target 100% projection of 139.87 to 148.64 from 142.66 at 151.43, which is close to 151.22 fibonacci level. Nevertheless, break of 147.50 minor support will extend the corrective pattern from 149.17 with another falling leg towards 145.84 first.

                    Australia CPI cools to 2.1% in Q2, June reading undershoots

                      By
                      ActionForex
                      -

                      Australia’s inflation pressures continued to ease in Q2, reinforcing expectations for further policy easing from the RBA.

                      Headline CPI rose 0.7% qoq, down from Q1’s 0.9% qoq and under the 0.8% qoq consensus. On an annual basis, CPI slowed from 2.4% yoy to 2.1% yoy, the lowest since early 2021, and below expectation of 2.2% yoy.

                      Trimmed mean inflation, the RBA’s preferred gauge, also moderated from 0.7% qoq to 0.6% qoq. Annual rate fell from 2.9% to 2.7% yoy, matched expectations, and marking the lowest since Q4 2021.

                      Underlying disinflation is broadening too. Annual services inflation cooled from 3.7% yoy to 3.3% yoy, the weakest since Q2 2022. Goods inflation dipped back to 1.1% yoy after a brief uptick from Q4’s 0.8% yoy to Q1’s 1.3% yoy.

                      The June monthly CPI dropped from 2.1% yoy to 1.9% yoy, also below expectations of 2.1% yoy, and undershoots RBA’s 2-3% target band.

                      Full Australia quarterly CPI release here.

                      NZ ANZ business confidence ticks up to 47.8, easing inflation signals more RBNZ cuts ahead

                        By
                        ActionForex
                        -

                        New Zealand’s ANZ Business Confidence ticked higher in July, rising from 46.3 to 47.8. Own Activity Outlook edged down slightly from 40.9 to 40.6. The share of firms expecting to raise prices over the next three months dropped to 43.5%—the lowest since December 2024. Inflation expectations also dipped from 2.71% to 2.68%.

                        ANZ described the inflation signals as “benign,” noting declines across both cost and pricing expectations. The bank suggested that RBNZ may soon shift from worrying about inflation staying too high to concerns about it falling too low, implying a greater likelihood of deeper monetary easing than currently priced in by markets or flagged by the RBNZ itself.

                        Full NZ ANZ business confidence release here.

                        US consumer confidence rises to 97.2, but recession signal persists

                          By
                          ActionForex
                          -

                          US Conference Board Consumer Confidence rose from 93.0 to 97.2 in July, beating expectations of 95.9. Expectations Index climbed 4.5 points to 74.4, signaling a slight improvement in sentiment about future conditions, but remained below the critical 80 threshold, a level typically associated with looming recession risk. Meanwhile, Present Situation Index dipped -1.5 points to 131.5, suggesting consumers’ views on current conditions remain broadly steady.

                          Stephanie Guichard of The Conference Board noted that while overall confidence has rebounded from earlier weakness, it “remains below last year’s heady levels.” She added that improved expectations on jobs, income, and business conditions helped drive July’s uptick.

                          Full US Consumer Confidence release here.

                          ECB survey shows inflation fears recede, growth pessimism softens

                            By
                            ActionForex
                            -

                            Eurozone consumers are dialing back their inflation expectations, according to the ECB’s latest Consumer Expectations Survey for June. Median one-year inflation expectations fell from 2.8% to 2.6%, fully reversing the uptick seen in March and April. Longer-term expectations remained anchored, with three-year and five-year outlooks steady at 2.4% and 2.1% respectively, the latter unchanged for seven consecutive months.

                            Household sentiment on spending also weakened. Expected nominal spending growth dropped to 3.2% in June, down from 3.5% in May and 3.7% in April. The continued decline suggests rising caution among consumers, likely driven by lingering geopolitical uncertainty, uneven wage growth, and lower perceived price pressures ahead.

                            On growth, expectations became slightly less negative. Median expectations for economic growth over the next 12 months improved to -1.0% from -1.1% in May and -1.9% in April. Still, households broadly expect economic contraction, reflecting the Eurozone’s fragile recovery and ongoing concerns around trade, manufacturing, and domestic demand.


                            Full ECB Consumer Expectations Survey release here.

                            Ranges hold in EUR/USD and stocks even as US-EU deal slammed

                              By
                              ActionForex
                              -

                              Investor sentiment cooled overnight as markets reassessed the US–EU trade agreement more critically. While initially welcomed for averting harsher tariff scenarios, the deal is now being viewed by many as a near-term drag on European growth. What once seemed like a “good deal” in absolute terms is now being interpreted as a relative setback for the EU economy.

                              Political backlash within Europe has intensified. French Prime Minister Francois Bayrou called the framework a “dark day” for Europe, accusing the bloc of capitulating to US demands. German Chancellor Friedrich Merz also warned that the tariffs embedded in the deal would inflict “significant” damage on Germany’s export-driven economy.

                              Despite the rhetoric, equity market reactions remained contained. Germany’s DAX lost -1.02% and France’s CAC fell -0.43%, but both indexes remain within tight sideways trading ranges. In the US, DOW dipped slightly by -0.14% while S&P 500 eked out a small gain of 0.02%, signaling that investors don’t see the agreement as overwhelmingly skewed toward American interests either.

                              EUR/USD came under strong selling pressure yesterday. However, the move is seen as part of the corrective pattern from 1.1829 short term top. Larger up trend is still expected to resume later. This view will hold as long as 55 D EMA (now at 1.1538) holds.

                              That said, technical headwinds are clearly building. The pair already touching the long term rising channel resistance, and nearing a long-term Fibonacci projection level at 1.1916, 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. Bearish divergence on D MACD suggests fading momentum, recent up trend is clearly running out of steam. Sustained break of 55 D EMA will argue that it’s already in a larger scale correction after rejection by 1.1916.

                              ECB’s Kazimir cites no urgency to cut rates again

                                By
                                ActionForex
                                -

                                Slovak ECB Governing Council member Peter Kazimir pushed back against expectations of a September rate cut, stating he doesn’t foresee any data “significant enough” to warrant action in the near term. Writing in a blog post, Kazimir, one of the more hawkish voices on the Council, emphasized that only clear signs like “unravelling in the labour market” would prompt him to support another cut.

                                Kazimir acknowledged that the US–EU trade deal brings a degree of stability, noting it “can help to ease concerns and regain confidence,” but cautioned that it’s too soon to judge its inflationary implications. He added that while inflation may dip below target in the coming year, he sees “no looming spectre of a sustained undershooting,” reinforcing his preference to wait and assess.

                                US-EU trade deal delivers Relief, Euro gains but lacks breakout momentum

                                  By
                                  ActionForex
                                  -

                                  In a significant breakthrough, the US and EU reached a framework trade agreement on Sunday, averting the imposition of 30% tariffs on European imports. Instead, a reduced 15% rate will apply to most goods. The two sides also agreed to exempt key strategic sectors—such as aircraft, chemicals, and some pharmaceuticals—from any tariffs entirely.

                                  The deal also includes sweeping commitments from the EU, including USD 750B in US energy purchases and USD 600 billion in fresh US-bound investment over current levels.

                                  EU Commission President Ursula von der Leyen called the agreement a win for “stability and predictability,” while acknowledging that the 15% tariff still presents challenges for European automakers. Meanwhile, the EU’s pivot toward US nuclear fuel and LNG also marks a decisive shift away from Russian energy dependency.

                                  US President Donald Trump declared the deal as larger than last week’s USD 550B Japan agreement and reiterated that it would significantly deepen US-EU ties across energy, defense, and trade. He claimed “hundreds of billions” in arms sales could follow.

                                  Euro advanced broadly on the announcement, but momentum is restrained. EUR/CHF is still capped below 0.9365 resistance despite today’s bounce. Firm break of this level is needed to be the first sign that consolidation pattern from 0.9445 has completed, and the rally from 0.9218 is ready to resume. Otherwise, more sideway trading would likely follow first.

                                  US durable goods slump -9.3% mom on transport orders

                                    By
                                    ActionForex
                                    -

                                    US durable goods orders plunged -9.3% mom to USD 311.8B in June, marking the steepest drop since April 2020. Still, the result was better than consensus forecasts of -11.0% mom decline. The weakness was driven almost entirely by transportation equipment, which tumbled -22.4% mom to USD 113.0B, pulling headline orders sharply lower.

                                    Beneath the surface, however, core figures were more resilient. Orders excluding transportation rose 0.2% mom to USD 198.8B, beating the 0.1% mom forecast. Ex-defense orders slumped -9.4% mom, reinforcing the outsized drag from specific sectors.

                                    Full US durable goods orders release here.

                                    ECB’s Villeroy emphasizes agile pragmatism

                                      By
                                      ActionForex
                                      -

                                      French and Finnish ECB officials are urging caution but not complacency as the central bank navigates an increasingly uncertain global environment. Speaking today, François Villeroy de Galhau said growth risks remain “tilted to the downside” and emphasized that “agile pragmatism in light of data and forecasts is of the essence.”

                                      Villeroy also noted that US tariffs—though still not fully defined—are unlikely to spark inflation to rise in the Eurozone. Instead, the recent appreciation of Euro is already exerting a “significant disinflationary effect,” which could aid in anchoring inflation near the ECB’s 2% target.

                                      Separately, Finnish policymaker Olli Rehn echoed the theme of strategic patience, warning that while caution is warranted, the ECB should avoid “waiting in vain.” He stressed the high “option value of waiting.”

                                      ECB forecasters see no enduring disinflation from tariffs

                                        By
                                        ActionForex
                                        -

                                        The ECB’s Q3 Survey of Professional Forecasters showed that headline inflation expectations have been revised down across the medium term. HICP inflation is now projected at 2.0% for 2025 (down from 2.2%) and 1.8% for 2026 (down from 2.0%), while 2027 remains unchanged at 2.0%. Core HICP inflation for 2025 is unchanged at 2.3%, but was revised down from 2.1% to 2.0% for both 2026 and 2027.

                                        Respondents cited tariffs as having a small downward effect on inflation in the short term, subtracting roughly -0.06 percentage points from the HICP in both 2025 and 2026, but anticipated no lasting impact beyond that.

                                        On growth, forecasters revised up their 2025 GDP forecast by 0.2 percentage points, trimmed 2026 by 0.1 points, and left 2027 unchanged at 1.4%.

                                        Full ECB SPF release here.

                                        German Ifo rises to 88.6, but recovery still sluggish

                                          By
                                          ActionForex
                                          -

                                          Germany’s Ifo Business Climate Index edged up from 88.4 to 88.6 in July, indicating only marginal improvement in business confidence. Current Assessment Index also ticked higher from 86.2 to 86.5, while Expectations Index held steady at 90.7. The Ifo Institute noted the recovery remains “sluggish,” with no clear acceleration in sight.

                                          By industry, sentiment in manufacturing improved from -13.9 to -11.8, while construction also saw a modest rebound to -14.0. However, services weakened slightly to 2.7, and trade sentiment deteriorated again to -20.2.

                                          Full German Ifo release here.

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