US officials plan to send letters soon to other countries for trade deals, while Global Times suggests extending the US-China trade truce. A South Korean delegation will visit the US next week to discuss tariff negotiations, and a potential trade deal is expected after the 8 July deadline.

Regarding interest rates, Fed’s Bostic predicts only one rate cut this year due to uncertainty. ECB’s Villeroy describes the current situation as a trade war, not a currency war. ECB’s Kazāks advocates for a meeting-by-meeting approach, and SNB’s Schlegel states Switzerland is not a currency manipulator.

Market Overview

Markets saw NZD lead and CHF lag, with European equities higher and US 10-year yields down 5.7 basis points to 4.398%. Gold fell 2% to $3,175.20, WTI crude rose 0.3% to $61.80, and Bitcoin climbed 0.2% to $103,712.

The dollar remained stable against the euro and yen, with EUR/USD near 1.1200 and USD/JPY around 145.60. USD/CHF rose 0.1% to 0.8368, while USD/CAD stayed nearly flat. Bond yields slightly decreased, with 10-year yields at 4.40% and 30-year yields at 4.86%.

The article outlines ongoing and upcoming trade negotiations across several major economies, alongside recent central bank commentary and market moves.

Trade discussions are widening, with the United States looking to spark or amend agreements beyond Asia. Correspondence is expected to be dispatched to multiple countries, which signals a fresh round of trade outreach. Meanwhile, commentary from Chinese state-run media points to a preference for preserving the relative calm in US–China trade relations. That timing isn’t incidental; we’re midway through the year, and several deadlines are now in focus.

A delegation from Seoul will soon meet with US officials to review tariffs. It’s understood a deal may be arranged around early July, likely post the 8th, giving both sides breathing room to finalise details. This type of targeted engagement has a useful knock-on effect for industries sensitive to trade frictions, particularly in sectors like semiconductors and automotive goods. For us, it reinforces how specific dates can anchor volatility and set direction even before official agreements are inked.

Monetary Policies and Currency Trends

On the monetary policy front, Bostic gave a clear steer that a rate cut is still on the table but will remain singular unless future data compels otherwise. That creates a narrow policy window. It’s not an aggressive stance, but nor is it entirely hands-off. Villeroy’s analogy of a “trade war” carries weight, especially amid fragmented global policy stances. Notably, Kazāks supported a case-by-case approach to rate decisions—this response framework is more cautious than reactive, and in current terms, it maps neatly to the current inflation path.

For Switzerland, Schlegel clarified their role in currency markets, rebuffing any accusation of manipulation. That’s pertinent; the franc’s underperformance this week happened not because of sharp intervention, but due to overall market alignment around yield differentials. If it signals anything further, it’s that central banks are increasingly vocal in pre-empting narrative drift.

Regionally, the New Zealand dollar outperformed, supported by either soft-landing optimism or forward yield premium—likely both—-while the Swiss franc underwhelmed. Equities in the euro area continued their gradual rise, helped by a pullback in yields and the lack of fresh policy shocks. The US 10-year yield dropped to 4.398%, suggesting confidence that rate normalisation can last a little longer before re-steepening resumes. It’s worth noting that core fixed income continues to drift lower in yield without panic or external catalysts.

Commodities reflected this mixed tone. Gold shed another 2%, now sitting at $3,175.20, which reflects shifting expectations on rates and inflation rather than safe haven outflows. Crude oil, via WTI, added a modest 0.3%, hovering near $61.80 per barrel. It’s unremarkable in volume but more reflective of supply reassessment than demand surge. Meanwhile, Bitcoin ticked up again, quietly registering a gain of 0.2% at $103,712—less about conviction buying and more to do with liquidity shifts driven by cash instruments.

The foreign exchange market was relatively balanced. The dollar was steady—EUR/USD found rhythm near 1.1200, providing little room for breakout trades; USD/JPY hovered around 145.60, with minimal intervention chatter; USD/CHF inched up 0.1% to 0.8368. Broadly, this suggests sustained interest rate spreads are holding firm across G10. USD/CAD barely budged, again highlighting how stable petroleum names often correlate with neutral CAD flows.

In rates, 10-year bond yields settled at 4.40% while 30-year treasuries edged to 4.86%. This yield compression supports the outlook that we’re not in a dislocation phase, but rather tracking expectations that don’t yet require recalibration. For those watching the next few weeks closely, the implications are clear. Yield stability plus modest FX adjustments limit room for leveraged repositioning. The next shift will likely come from policy minutes or scheduled data surprises—not the flow itself. Let’s stay patient and alert across sessions.

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