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Canada's labor market posted a strong rebound in June, adding 83,000 jobs, far above expectations of just 900. Unemployment rate dipped from 7.0% to 6.9%, defying forecasts of an increase to 7.1%.

The decline ends a three-month stretch of rising joblessness and was supported by a 0.1 percentage point uptick in the employment rate to 60.9%. Total hours worked also rose by 0.5% on the month, putting them 1.6% higher than a year earlier—a sign of sustained underlying momentum.

Wage growth continued to moderate, with average hourly earnings rising 3.2% yoy from a year ago, down from May’s 3.4% yoy.

Full Canada's employment release here.

US dollar

The escalation of trade conflicts has led to a temporary strengthening of the US dollar. Donald Trump has sent numerous letters to various countries specifying the size of tariffs. They will come into effect on August 1st. Until then, the White House is open to negotiations. There are rumours in the market that the United States will soon conclude trade deals with India, Taiwan, and the European Union.

According to Deutsche Bank, the average US tariff is 18.7%. This is lower than the 22% that was in place on Independence Day. However, the figure is still high. Such import duties increase the risks of an economic slowdown and accelerating inflation, but there is no talk of a recession. Therefore, the USD index did not fall as it did in April.

Investors have moved away from the ‘sell America’ strategy. As a result, the dollar and US stock indices have diverged. The greenback is once again behaving as a safe-haven asset, falling when risk appetite rises and vice versa.

Stock indices

After a slight dip due to Donald Trump’s letters, the S&P 500 began to rise again. The stock market perceived the escalation of the trade conflict as prolonging the delay. Investors bought up the dip. The US economy is strong, inflation is slowing, and corporate profits are high. In such conditions, the potential for a correction in the broad stock index is limited. Bank of America raised its forecasts for the index of the 500 largest companies to 6,300 and 6,600 at the end of the year and in 12 months. Goldman Sachs sees the market at 6,600 and 6,900.

Technology corporations are leading the stock market rally. NVIDIA became the first company in the world whose capitalisation exceeded $4 trillion. Since the beginning of the year, its shares have risen by 20%, and since 2023 by more than 1000%. This allowed the Nasdaq Composite to update its record highs. The S&P 500 came within arm’s reach of them.

Stock indices are supported by expectations of a resumption of the Fed’s monetary policy easing cycle and a successful auction of $39 billion in 10-year Treasury bonds. High demand led to a decline in yields, and the S&P 500 is seeing new record highs.

The British pound continues to have a quiet week. In the European session, GBP/USD is trading at 1.3530, down 0.30% on the day.

UK economy contracts in May

The UK wrapped up the week on a down note, as GDP contracted in May by 0.1% m/m. This followed a 0.3% decline in April and missed the consensus of 0.1%. The decline was driven by a 1% decline in manufacturing and a 0.6% contraction in construction, which cancelled out a 0.1% expansion in services.

The GDP contractions in April and May point to a weak second quarter of growth, after an impressive 0.7% gain in the first quarter. The economic landscape remains uncertain and the Bank of England has projected weak growth of 1% for 2025. Governor Bailey has said that the rate path will be "gradually downwards" but hasn't hinted as to the timing of the next cut.

The weak GDP data supports the case for an August rate cut, even though headline inflation is running at 3.4% and core inflation at 3.5%, well above the BoE's target of 2%. The money markets have priced in a quarter-point cut in August at 80%, which would lower the cash rate to 4.0%.

The BoE released its financial stability report earlier in the week, noting that the outlook for UK growth over the coming year is "a little weaker and more uncertain". The Bank highlighted President Trump's tariffs and the conflict in the Middle East. The UK has recently signed a trade deal with the US but some tariffs on UK products remain in effect.

GBPUSD Technical

• GBP/USD is testing support at 1.3534. Below, there is support at 1.3491
• The next resistance lines are 1.3577 and 1.3620

GBPUSD 1-Day Chart, July 11, 2025

US President Donald Trump has announced his decision to impose new tariffs:

→ For Canada, tariffs are set at 35%. They are scheduled to take effect on 1 August, although negotiations may take place before this date, potentially influencing Trump’s final stance.

→ For many other countries, tariffs may be set at 15% or 20%;

→ For the European Union, the exact tariff levels have not yet been disclosed.

Overall, Trump’s latest comments have added to the uncertainty surrounding the specific tariffs to be applied to each country. The financial markets reacted as follows:

→ The US dollar strengthened against other currencies (including the Canadian dollar);

→ Equity markets saw a modest decline.

Technical Analysis of the USD/CAD Chart

As soon as the announcement of a 35% tariff on Canadian imports to the US was made public, the USD/CAD rate spiked sharply (as indicated by the arrow), reaching levels last seen at the end of June. In the hours that followed, the pair stabilised.

Taking a broader view, the chart appears to show a triangular formation, which consists of:

→ A descending resistance line (R);

→ A key support level (S) around 1.3570.

From this perspective, it is worth noting that the bulls’ attempt to break above the resistance line amid the 35% tariff news did not succeed, indicating strong selling pressure.

At the same time, the price action of USD/CAD in early July allows us to identify a local support level (marked by the blue line). This suggests that, for now, the pair is consolidating within a formation bounded by the blue support line and resistance line R.

However, how long this consolidation will last, and which direction the breakout will take, will most likely depend on the next round of news regarding US–Canada trade negotiations.

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On Friday, the USD/JPY pair advanced to 146.93, marking a three-week high as the US dollar continued to strengthen against a backdrop of escalating global trade tensions.

Recent developments in US trade policy have further unsettled markets. US President Donald Trump announced additional tariffs, including a 35% levy on Canadian imports, alongside plans for sweeping 15-20% duties on most other trading partners.

Of particular concern are US-Japan relations, following Trump’s imposition of a 25% tariff on Japanese goods this week, set to take effect on 1 August. The move has intensified bilateral strains, with Japanese Prime Minister Shigeru Ishiba warning of the need to reduce Japan’s reliance on the US in defence, food security, and energy.

Ishiba described the ongoing negotiations as a “battle for national interests”. At the same time, a leading Japanese think tank projected that the tariffs could shave 0.8% off Japan’s GDP in 2025, with a cumulative decline of 1.9% by 2029.

Technical Analysis: USD/JPY

H4 Chart:

The USD/JPY has established a consolidation range around 145.65, now extending to 147.17. A short-term pullback to 145.65 (testing from above) is anticipated, followed by a potential upward wave targeting 147.47 at minimum. This outlook is supported by the MACD indicator, with its signal line firmly above zero and trending upward.

H1 Chart:

A consolidation phase near 146.41 preceded an upward breakout, completing a wave structure at 147.17. A downward correction towards 145.65 is now in view, corroborated by the Stochastic oscillator, where the signal line sits at 80 and points sharply downward.

Conclusion

The yen’s weakness persists amid dollar strength and trade uncertainties, with technical indicators suggesting near-term volatility. Traders should monitor 145.65 as a key support level, while further upside towards 147.47 remains plausible.

ECB Executive Board member Isabel Schnabel signaled in an interview with Econostream Media that there is urgency for further easing. Schnabel noted that inflation is now projected to be at 2% target over the medium term, and expectations remain "well anchored", while interest rates are in a "good place". She added that "the bar for another rate cut is very high".

Schnabel emphasized that there is "no risk of a sustained undershooting" and that core inflation is forecast to meet target throughout the horizon. She also downplayed concerns over the disinflationary impact of Euro strength, calling such fears “exaggerated” given limited pass-through effects. Schnabel argued that temporary factors such as low energy inflation are unlikely to derail the ECB’s price stability goals.

On the growth front, Schnabel was notably upbeat. Recent PMI data suggesting further recovery ahead. Manufacturing indicators such as new orders and export demand have all reached three-year highs, pointing to more than just temporary momentum. Combined with record-low unemployment and the expectation of a large fiscal impulse, she argued that risks to the growth outlook are now "more balanced", reducing the case for near-term rate action.

Full interview of ECB's Schnabel here.

The S&P 500 edged up 0.3% on Thursday, 10 July, closing at a marginal new record high of 6,280. However, bullish momentum faded in the Asian session, with S&P 500 and Nasdaq 100 E-mini futures both down 0.3% amid renewed tariff anxieties.

Trump escalates trade tensions with Canada

US President Trump announced a tariff hike on Canadian imports to 35%, up from the current 25%, set to take effect on 1 August. These apply to Canadian goods not covered under the USMCA trade pact. He also hinted that the base tariff rate on all US trading partners might rise from 10% to 15–20%.

Asia stocks rally on hopes of China stimulus

Asia Pacific stock markets largely shrugged off US tariff threats, buoyed by reports that China may unveil a new stimulus plan targeting its embattled property sector. The rumoured high-level policy meeting next week is said to mirror the 2015 Central Urban Work Conference, which spurred infrastructure and urban development spending.

Hang Seng and STI extend gains; Nikkei lags

Hong Kong’s Hang Seng Index jumped 1.7% to a four-month high, breaking above its 20-day moving average for the first time since 24 June. Singapore’s Straits Times Index climbed 0.4%, on track for a fifth straight record close, nearing the psychological 4,100 level. In contrast, Japan’s Nikkei 225 fell by 0.2%.

FX market mixed; USD gains against JPY and CAD

The US dollar strengthened most against the Japanese yen (-0.4%) and Canadian dollar (-0.3%) in today’s Asia session. Meanwhile, the Australian dollar held steady, with AUD/USD staying above its 20-day moving average support around 0.6540.
Gold climbs for a third day despite stronger dollar

Gold (XAU/USD) defied the firmer dollar, rising 0.5% intraday for its third straight gain. Ongoing tariff fears provided safe-haven support, pushing prices toward the key intermediate resistance at US$3,360.

Economic data releases

Fig 1: Key data for today’s Asia mid-session (Source: MarketPulse)

Chart of the day – Bullish momentum remains intact in AUD/USD

Fig 2: AUD/USD minor trend as of 11 July 2025 (Source: TradingView)

The recent up move seen in the AUD/USD from this Tuesday, 8 July’s minor swing low of 0.6485, and the reintegration back above its 20-day moving average. These observations suggest that the minor corrective decline sequence from the 1 July high to the 8 July low is likely to have ended (see Fig 2).

In addition, the hourly RSI momentum indicator has managed to stage a bounce right at a parallel ascending support and the 50 level, which highlights a revival of bullish momentum conditions.

Watch the 0.6540 key short-term pivotal support, and a clearance above 0.6600 increases the odds of a new bullish impulsive up move sequence to see the next intermediate resistances coming in at 0.6630/6645 and 0.6690/6700 (Fibonacci extension and upper boundary of the minor ascending channel).

However, failure to hold at 0.6540 negates the bullish tone for a slide to revisit the next immediate supports at 0.6510 (also the 20-day moving average) and 0.6480 (also the 50-day moving average).

Daily Pivots: (S1) 1.7679; (P) 1.7822; (R1) 1.7902; More...

EUR/AUD's strong break of 1.7872 support suggests that rebound from 1.7245 has completed with three waves up to 1.8094. Intraday bias is back on the downside. Sustained trading below 55 D EMA (now at 1.7694) will suggest that corrective pattern from 1.8554 high is already in the third leg. Deeper fall should then be seen back to 1.7245 support. Nevertheless, strong rebound from the EMA will maintain near term bullishness for another rise through 1.8094 later.

In the bigger picture, price actions from 1.8554 medium term are seen as a corrective pattern. While deeper pullback might be seen, downside should be contained by 38.2% retracement of 1.4281 (2022 low) to 1.8554 at 1.6922 to bring rebound. Up trend from 1.4281 is expected to resume at a later stage.

Daily Pivots: (S1) 0.8606; (P) 0.8620; (R1) 0.8630; More...

Intraday bias in EUR/GBP remains neutral for consolidations below 0.8668. Further rise is expected as long as 0.8506 support holds. Above 0.8668 will target a retest on 0.8737 high. Decisive break there will resume the whole rise from 0.8221 low.

In the bigger picture, the structure from 0.8221 medium term bottom are not impulsive enough to suggest that it's reversing the downside from 0.9267 (2022 high). But even if it's a correction, firm break of 0.8737 will still pave the way to 61.8% retracement of 0.9267 to 0.8221 at 0.8867.

Daily Pivots: (S1) 198.24; (P) 198.74; (R1) 199.11; More...

Intraday bias in GBP/JPY remains neutral for consolidations below 199.80. Further rise is expected as long as 195.33 support holds. Break of 199.80 will resume the rise from 184.35 to 100% projection of 180.00 to 199.79 from 184.35 at 204.14 next.

In the bigger picture, price actions from 208.09 (2024 high) are seen as a correction to rally from 123.94 (2020 low). The pattern might still extend with another falling leg. But in that case, strong support should be seen from 38.2% retracement of 123.94 to 208.09 at 175.94 to contain downside. Meanwhile, decisive break of 208.09 will confirm long term up trend resumption.