The RBA intends to lower rates next week. The Singapore dollar strengthened to a 10-year high against the US dollar

At the end of Monday, the Dow Jones Index (US30) rose by 0.63%. The S&P 500 Index (US500) added 0.52%. The Nasdaq (US100) Technology Index closed higher by 0.64%. The S&P 500 (US500) and Nasdaq (US100) indices updated their historical highs, helped by strong performance from tech giants such as Microsoft and Meta, which also reached new highs. Optimism increased amid signs of progress in trade negotiations, as evidenced by Canada’s recent decision to cancel a digital services tax targeting US technology companies, which eased tensions that had been weighing on the markets. Investors remain focused on July 9, when President Trump’s tariff reprieve expires, and hope that additional trade deals will help avoid tariff escalation.

European stock markets were mostly down on Monday. The German DAX (DE40) fell by 0.51%, the French CAC 40 (FR 40) closed down 0.33%, the Spanish IBEX35 (ES35) added 0.16%, and the British FTSE 100 (UK100) closed down 0.43%. Inflation in Germany surprised with a decline, falling to 2% year-on-year in June from 2.1% in May and against market expectations of 2.2%. A separate report showed that retail sales fell 1.6% in May after declining 0.6% in the previous month, indicating continued weakness in consumer demand.

WTI crude oil prices fell to $64.7 per barrel on Tuesday, posting a second consecutive day of losses amid concerns about oversupply amid OPEC+ plans to increase production. The group is reportedly planning to increase production by 411,000 barrels per day in August, following similar increases in May, June, and July. If confirmed, the total increase in supply from OPEC+ would be 1.78 million barrels per day this year, equivalent to more than 1.5% of total global demand.

Asian markets were mostly higher yesterday. Japan’s Nikkei 225 (JP225) rose by 0.84%, China’s FTSE China A50 (CHA50) added 0.09%, Hong Kong’s Hang Seng (HK50) fell by 0.87%, and Australia’s ASX 200 (AU200) showed a positive result of 0.33%.

The Australian dollar weakened to $0.656 on Tuesday after reaching seven-month highs in the previous session, as growing expectations of a rate cut at the Reserve Bank of Australia’s (RBA) July 2025 meeting put pressure on the currency. Markets are now pricing in a 95% probability that the Central Bank will cut its cash rate by 25 basis points to 3.60%, even if Wednesday’s retail sales data exceeds expectations. An additional argument in favor of easing monetary policy is the continued low consumer spending figures, which consistently fall short of the RBA’s expectations.

In early July, the Singapore dollar strengthened to around 1.27 per US dollar, its highest level since October 2014, supported by steady domestic policy adjustments, increased risk appetite, and a general weakening of the US dollar. The Monetary Authority of Singapore (MAS) recently took a balanced approach, slightly reducing the slope of the SGD nominal effective exchange rate corridor to reflect the slowdown in economic growth.

Annual inflation in Indonesia accelerated to 1.87% in June 2025 from 1.60% in May, slightly above market expectations of 1.83%, remaining within the Central Bank’s target range of 1.5% to 3.5%. Core inflation, which excludes food prices, fell to a five-month low of 2.37% from 2.4% in May and was below the consensus expectations of 2.44%.