Insights 
VT 
The US dollar saw a slight decline following the strong non-farm payroll figures, while European equities also faced downturns with S&P 500 futures falling by 0.6%. In the commodities market, gold increased by 0.3% to $3,336.22 and WTI crude decreased by 0.9% to $66.42. Bitcoin experienced a decline of 0.8%, sitting at $109,100.
US tariff changes were announced by Trump, with letters going out to 10-12 countries regarding increased tariffs starting 1 August. Meanwhile, China confirmed up to 34.9% duties on European brandy, impacting French cognac producers. These developments contributed to weaker risk sentiment, with European indices down and French stocks leading the declines.
Dollar And Commodity Movements
In forex, the dollar’s gains from the payroll data diminished, with EUR/USD rising around 1.1775 and USD/JPY dropping 0.4% to 144.30. USD/CHF decreased by 0.2% to 0.7930. The dollar’s performance against commodity currencies showed minor movements, with USD/CAD up 0.1% to 1.3590 and AUD/USD down 0.1% to 0.6560. Despite recent strength, the broader outlook for the dollar remains largely unchanged. Looking ahead, markets will refocus on trade headlines and assess the dollar’s resilience amid fluctuating US policy stances.
The movements we’ve seen reflect a market grappling with both policy shifts and slower summer participation. While the non-farm payroll data initially supported the dollar, it failed to maintain momentum. A reversal in sentiment unfolded rather quickly once the implications of new trade barriers began to ripple through investor outlooks. Gains were effectively unwound as traders digested policy noise coming from Washington and fresh tensions between Beijing and Europe.
What this means in practice is that the initial knee-jerk reaction to strong employment figures gave way to broader caution. The labour data did provide a momentary lift, implying a still-resilient jobs market, but without follow-through in rates pricing or equity conviction, it faded fast.
Europe’s rough session was not entirely surprising. The introduction of Chinese tariffs on imported brandy from Europe, particularly the steep duty range, placed exporters under visible pressure. French-listed firms bore the brunt of the risk-off tone, with the CAC 40 leading losses across the region. There is now a broad consensus forming across desks that tensions linked to strategic sectors such as agri-food and luxury may not ease quickly, especially when intergovernmental rhetoric remains elevated.
Market Sentiment Shifts
The dollar, meanwhile, has seen its broader direction readjusted by day-to-day flows and expectations around Fed policy adjustments. The pullback in USD/JPY, for instance, aligns with lower US Treasury yields, which suggests some reassessment of rate trajectories beyond the summer. Adjustments in pairs like USD/CHF and EUR/USD felt mechanical rather than driven by fresh conviction. Looking at USD/CAD and AUD/USD, the lack of clear momentum indicates how geographically diverse risk drivers—oil for Canada, Chinese trade demand for Australia—continue to produce inconclusive signals.
Over the next stretch, we expect these constraints to test positioning. Passive flow activity could remain light, yet there’s little room for complacency. Tariff changes scheduled to take effect in early August are now being priced in more directly, not just as headline risk but as real cost pressure on selected sectors. There’s a growing risk that retaliatory moves become less targeted. If that happens, equity indices sensitive to global trade could experience sharper adjustments during lower-liquidity hours.
Let’s not overlook commodity behaviour in the mix. Gold’s modest ascent fits with hedging demand typical in an uncertain pricing environment. The retreat in oil, while not extreme, continues to echo inventory builds and ongoing supply-side strength. For now, both remain within contained ranges, but multi-week option skew suggests growing interest in protecting against a sharp move lower in crude.
Equity futures and currency volatilities still remain below levels we might expect, given the nature of the trade developments. There’s likely a degree of underpricing here. Once summer positioning begins to unwind—closer to central bank meetings in late July—we could see renewed interest in gamma hedging and spread dispersion.
In terms of expectations, adjustments are underway, but not exaggerated. S&P futures declined in line with what has been a softening in cyclicals, and tech participation was muted. The balance of flows suggests participants are giving more weight to short-term political noise than macro signals, at least for now.
As we continue to monitor trade shifts, it’s advisable to watch for asymmetries—those moments where policy announcements disproportionately hit one market without similar reaction elsewhere. It’s precisely these dislocations that tend to offer the clearest entry points for short-dated gamma or calendar spreads.
Overall, what we’re seeing is not yet a trend shift, but rather a recalibration of short-term expectations. Policy variability—in both directions—remains the dominant variable affecting pricing across asset classes.
