2025-07-29 18:11

Euro poised for first monthly loss against dollar US-EU trade deal criticized by some euro zone leaders US and China agree to extend tariff truce Dollar index set for first month of gains this year NEW YORK, July 29 (Reuters) - The dollar hit a one-month high versus the euro on Tuesday in the wake of a string of trade agreements between the United States and its major trade partners, while markets await interest rate decisions from the Federal Reserve and the Bank of Japan. U.S. President Donald Trump struck his biggest trade deal yet with the European Union on Sunday, which imposes a 15% import tariff on most EU goods and includes $600 billion of EU investments into the United States. It tops a $550 billion deal signed with Japan last week that includes a 15% reciprocal tariff. Sign up here. U.S. and Chinese officials finished two days of talks in Stockholm on Tuesday. While there were no signs of breakthroughs, both sides agreed to extend a 90-day tariff truce struck in mid-May, China's top trade negotiator, Li Chenggang, said. The euro was down 0.39% against the dollar at $1.154775, hitting its lowest level since June 23. The single currency had dropped 1.29% in the previous session, its steepest one-day decline since mid-May. The euro is poised to record its first monthly loss against the dollar this year. "After falling sharply in the first half of the year, the dollar began July with a bounce, and I think it's mostly short covering. And the issue is whether this is a trend change or an overdue technical correction," said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, rose 0.30% to 98.91, hitting its highest level since June 23. The index is set to record its first month of gains this year. "The market had a sigh of relief that the tariffs, at the least the plan announced with Japan and the EU and the likely 90-day extension with China, helped remove downside tail risk," Chandler said. Several EU leaders have criticized the trade agreement reached with the United States. German Chancellor Friedrich Merz said his country would suffer significant damage due to the agreed tariffs. France's prime minister on Monday called the agreement a "dark day" for Europe. Markets anticipate that the Fed will leave interest rates unchanged at the end of its two-day monetary policy meeting on Wednesday. U.S. Treasuries slipped on Tuesday, with the yield on benchmark U.S. 10-year notes falling 8.6 basis points to 4.334%. "Ahead of (Wednesday's) Fed decision, we might get some consolidation. People are concerned about a possible dissent from at least one of the governors, maybe it's Waller or Bowman," Chandler added. Christopher Waller earlier this month said he believed the U.S. central bank should cut rates at its July meeting. Michelle Bowman, who is now the central bank's top bank overseer, in June said she was open to cutting rates at this month's meeting. The Bank of Japan also is likely to hold off raising interest rates on Thursday after the Japanese trade agreement with the United States last week. The dollar was down 0.05% to 148.465 against the Japanese yen . Against the Swiss franc , the dollar strengthened 0.28% to 0.806 franc. "We expect the next leg of the Dollar weaker move to come from monetary policy rather than trade uncertainty," Goldman Sachs analysts led by Isabella Rosenberg wrote in an investor note. "The latest trade deal announcements and limited evidence of tariff passthrough to prices have lowered inflation uncertainty and put downward pressure on implied vol." https://www.reuters.com/world/middle-east/dollar-reaches-one-month-high-versus-euro-trade-deal-optimism-fed-view-2025-07-29/

2025-07-29 17:33

July 29 (Reuters) - Italian drugmaker Recordati (RECI.MI) , opens new tab reported on Tuesday a 9.6% rise in first-half core profit, but said adverse currency moves would have a bigger than impact than previously expected over the full year. The pharmaceutical company's earnings before interest, taxes, depreciation and amortisation (EBITDA) for the first half of the year came in at 496.3 million euros ($572.8 million), while its adjusted net income rose 8.9% to 327.8 million euros. Sign up here. While confirming its 2025 guidance, Recordati warned of a "significantly higher" impact from unfavourable currency moves, amounting to a 3% revenue hit on a yearly basis. The pharmaceutical firm had said at the beginning of the year it expected a 1% hit from adverse currency moves. ($1 = 0.8665 euros) https://www.reuters.com/business/healthcare-pharmaceuticals/recordatis-core-profit-rises-sees-bigger-fx-hit-2025-07-29/

2025-07-29 15:48

1.5 billion euro tariff hit at top end of earlier guidance New CEO Filosa aims to restore growth after US market struggles Shares pared early losses after Filosa's call with analysts MILAN, July 29 (Reuters) - Stellantis (STLAM.MI) , opens new tab warned on Tuesday of a 1.5-billion-euro ($1.7 billion) hit from U.S. tariffs this year, but pledged new vehicle launches to reconnect with customers as its new CEO tries to get the automaker back on track after a dismal 2024. In his first public appearance as CEO, company veteran Antonio Filosa said the priority was to return to volume growth. Sign up here. "That means ... the expansion of our lineup with the addition of new products that are much closer to customer demands," he told analysts, citing a decision to reintroduce the popular Hemi 8-cylinder engine for Ram trucks. Milan-listed shares in Stellantis pared morning losses and rose up to 3.8% after Filosa's call with analysts. They closed up 0.2%. The French-Italian-American automaker forecast a low-single-digit margin on its adjusted operating income in the second half of 2025, following an "incredibly tough" first half. "First half was ... nowhere near where we want and need to be," Filosa said. "We still have tons of work to do. In particular, we are focused on bringing products back to segments where we have been absent," he added, without elaborating beyond the V8 Ram. Filosa was appointed in May after former boss Carlos Tavares was ousted in December following a disastrous performance last year in the crucial U.S. market. "I don't like blame, I like responsibility and accountability," Filosa told analysts. Stellantis' forecasts for the second half, which analysts described as vague, also include higher net revenues and improved industrial free cash flow compared with the first half, when it burned through 3 billion euros of cash. The company said the forecasts were based on tariff rules following a weekend trade agreement between the European Union and United States. The 1.5-billion-euro tariff impact - which includes 300 million euros incurred in the first half - is at the higher end of a forecast range of 1.0 billion to 1.5 billion euros provided last week when Stellantis released preliminary figures for the first half, which were broadly confirmed on Tuesday. CHALLENGES AHEAD Asked whether he was planning to streamline Stellantis sprawling portfolio of 15 brands, which includes Jeep, Peugeot, Chrysler and Fiat, Filosa said it was a "strength" against competitors. "We want to work it better. We want to be more effective and efficient in our brand portfolio management," he said. Stellantis in April withdrew its guidance for a moderate recovery this year after a 70% net profit drop in 2024, due to the uncertain impact of U.S. tariffs. Sunday's EU-U.S. framework trade deal imposed a 15% U.S. import tariff on most EU goods - half the threatened rate. Stellantis, however, is mostly exposed to the 25% levy that the U.S. has imposed on Mexico and Canada, on top of an existing 2.5% tariff, with more than 40% of the 1.2 million vehicles it sold last year in the U.S. imported from those countries. ($1 = 0.8670 euros) https://www.reuters.com/business/autos-transportation/stellantis-vows-reconnect-with-customers-it-flags-17-billion-us-tariff-hit-2025-2025-07-29/

2025-07-29 15:04

IMF raises emerging economies' 2025 GDP forecast to 4.1% from 3.7% China's 2025 GDP growth forecast increased to 4.8% due in part to tariff reductions Russia and South Korea's GDP forecasts downgraded for 2025 NEW YORK, July 29 (Reuters) - The International Monetary Fund raised its outlook for economic growth across emerging market and developing economies this year to 4.1% from 3.7%, driven by frontloading and a more upbeat view on China. In an update published on Tuesday to its flagship World Economic Outlook report, the IMF also nudged its 2026 economic growth forecast for emerging economies up to 4.0% from 3.9%. Sign up here. China received the largest upgrade with the IMF predicting the world's number two economy would expand 4.8% this year compared with a previous forecast for 4.0%. "This revision reflects stronger-than-expected activity in the first half of 2025 and the significant reduction in U.S.–China tariffs," the IMF said, adding that the latest forecasts assumed the U.S. effective tariff rate at 17.3% rather than the 24.4%, which formed the basis of its calculations in April. The IMF also noted that for all countries "pauses on higher tariffs are assumed to remain in place past their expiration dates and higher rates are assumed not to take effect". China posted 5.2% growth in the second quarter, but cracks are showing in the export-led economy at the center of the trade war. Beijing is facing an August 12 deadline to reach a durable tariff agreement with Washington, after reaching preliminary deals in May and June. Many countries will see higher duties starting later this week. Negotiations continue Tuesday in Stockholm. Risks for the outlook are tilted downward, the IMF said, given the "precarious equilibrium of trade policy stances assumed in the baseline." The IMF said Brazil would further decelerate if additional U.S. tariffs were imposed. Growth in Latin America's largest economy is seen at 2.3% this year from 3.4% in 2024. The upgrade for emerging markets reflects a more optimistic outlook globally by the IMF, which nudged global GDP growth forecast up to 3.0% for 2025 and to 3.1% in 2026. However, those levels still mark a downgrade on the Fund's projections made in January. While most individual economies received upgrades, Russia and South Korea were the exceptions. Russia's economy is now seen expanding 0.9% this year, from a previous view of 1.5% growth. South Korea's new 0.8% GDP growth forecast for 2025 compares with 1.0% previously. https://www.reuters.com/world/china/imf-lifts-2025-gdp-emerging-economies-outlook-improved-china-view-2025-07-29/

2025-07-29 14:36

Euro saw biggest first half gains in its history Speculative long euro bets at $18.4 billion ahead of weekend Trade deal removes uncertainty for dollar as well as euro Fears for dollar at start of year unrealised LONDON, July 30 (Reuters) - Euro bulls are facing the first big test of their conviction in the form of the European Union's U.S. trade deal, which has cast doubt on the durability of one of 2025's most popular trades. The euro, which hit a four-year high of $1.1830 earlier this month, was last at $1.1554 following its biggest two-day drop since April on Tuesday , after the EU agreed to a 15% tariff on its U.S. exports - half the rate President Donald Trump had previously threatened, but well above the roughly 1.5-2% rate prior to his return to the White House. Sign up here. While it inched higher on Wednesday, it was set for its first monthly drop this year, down nearly 2% in July. That's quite a reversal. The euro's 14% gain in the first half of the year was the biggest since its creation, as investors rushed to the common currency on the back of the announcement of a once-in-a-generation shift in German fiscal spending just as U.S. President Donald Trump's erratic trade policies drove flows out of U.S. assets. But both of those factors are challenged by the agreement: The European economy will still take a hit from the tariffs, while deals the U.S. has agreed with the EU and other partners have reduced fears about a major slowdown there. "The long euro trade is undoubtedly facing a reality check this week," said Bruno Schneller, managing director at Erlen Capital Management. "Monday’s sharp drop in euro/dollar felt like more than just a reaction to headlines — it exposed how stretched positioning had become in one of the market’s most consensus views." "What stood out wasn’t just the magnitude of the move, but the lack of support on the way down." Going into the weekend, speculators were sitting on a bullish bet on euro futures worth $18.4 billion , the largest since December 2023, according to weekly data from the Commodity Futures Trading Commission. That position has been building since last December. At the start of the year speculators held one of their largest bearish positions in the euro in almost five years. RELATIVE ECONOMIC PERFORMANCE The euro also weakened sharply against other currencies on Monday, dropping 0.8% on the pound and 0.7% on the Japanese yen, again after recent gains. But the bulk of its moves, both up this year, and down this week, have been against the dollar. In trade-weighted terms, the euro is only up about 5% this year. And its gains on the U.S. currency were already slowing as initial pessimism towards the U.S. at the start of the year faded thanks to strong economic data and earnings, reinforced by the flurry of trade deals with Japan and the EU, and ongoing negotiations with China. "The (U.S.-EU) trade deal has removed a potential headwind (for the euro) but it has also removed an uncertainty for the dollar too, which leaves the euro looking a little overvalued," said Michael Metcalfe, head of macro strategy at State Street. But the end of the euro's rally on the dollar is not yet a done deal. "The vast majority of people - ourselves included - think that this is just a correction to an underlying bull trend in euro/dollar," said Chris Turner, global head of research at ING. He said the biggest test would be on the dollar side of the currency pair, as investors had now digested the impact of the trade deal on Europe. Therefore, the focus turns to this week's economic data, including U.S. jobs and inflation and European economic growth, and Wednesday's Federal Reserve meeting. The Fed is likely to keep U.S. interest rates steady, which may generate more angry rhetoric from Trump who has been pushing for big cuts. This matters for the dollar. The currency fell sharply earlier this month, including against the euro, when Trump appeared close to trying to fire Fed Chair Jerome Powell. And even setting aside the trade deal, there are reasons to be optimistic about Europe, particularly given Germany's spending plans. "We haven't changed our view of upside risks to growth in Europe," said Russel Matthews, portfolio manager at RBC BlueBay Asset Management, who has been neutral on currencies as he balanced "the long term structural bias for a weakening dollar" with "the more positive short-term technical picture." "The new narrative that the U.S. has got a better deal has tarnished, to some extent, the upside potential from developments in the last three to six months in Europe, but it hasn't necessarily changed that dynamic." https://www.reuters.com/world/middle-east/euro-bulls-wince-us-eu-trade-deal-slams-brakes-rally-2025-07-29/

2025-07-29 14:28

July 29 (Reuters) - Additional U.S. tariffs on Brazil would lead to a steeper slowdown in activity than currently projected for the South American country's economy, a preliminary assessment by the International Monetary Fund showed. Some tariffs - for example those on steel and aluminum products - were already affecting the Brazilian economy and had been taken into account for the Fund's latest forecast, said Petya Koeva-Brooks, Deputy Director at the IMF Research Department. Sign up here. "Now, when it comes to the broader question of the impact of further tariffs that had been put forward, our preliminary assessment is that that would lead to a steeper slowdown in activity than we currently are projecting," said Koeva-Brooks. The IMF sees Brazil's economy growing 2.3% in 2025 from a 3.4% expansion last year. Products that would be subject to these additional tariffs are expected to make up around 1.1-1.4 percentage points of GDP, she added, speaking during a news briefing at the launch of the update to the Fund's World Economic Outlook published on Tuesday. https://www.reuters.com/world/americas/more-tariffs-brazil-would-mean-steeper-slowdown-activity-says-imf-2025-07-29/