Japan Inflation Eases, Retail Growth Slows, Jobs Hold Steady

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3520-1.3760

Euro                 1.5830-1.6080

Sterling            1.8630-1.8870

WTI Oil (opening level) $65.87

The CAD/USD is opening at 1.3651 ( 0.7326 ) 

Headlines

·    The US economy contracted by 0.5% in Q1 2025, the first decline in three years, driven by reduced consumer spending and exports. Consumer spending rose 0.5%, the slowest since 2020, and exports grew 0.4%.

·    According to Reuters, Trump announced signing a deal with China on Wednesday and mentioned a potential upcoming deal with India, adding that China is beginning to open up.

·    Core consumer prices in Tokyo's Ku-area increased by 3.1% in June 2025, down from 3.6% in May and below the expected 3.3%. This is the first slowdown since February, but still above the Bank of Japan's 2% target.

·    Japan's retail sales grew by 2.2% in May 2025, below the expected 2.7% and slower than April's revised 3.5%. This marked the 38th consecutive month of growth, supported by rising wages.

·    Japan's unemployment rate remained at 2.5% in May 2025 for the third month, meeting expectations. Unemployment dropped by 40,000 to 1.72 million, while employment increased by 33,000 to a record 68.37 million.

·    Spain's Prime Minister Pedro Sanchez risks a backlash from the Trump administration for opting out of the NATO commitment by European members signed this week to raise defense spending to 5% of GDP. Trump said that Spain was trying to get a "free ride" and would pay twice the tariff rates of other EU countries, theoretically not possible to enforce if the US strikes a deal with the EU as a whole. 

Key Points

·    Equities: US tech, banks rally; defense stocks surge; tariff risks ease

·    Volatility: VIX drops; stable environment; watch for sudden shifts

·    Digital assets: BTC steady; IBIT/ETHA inflows; crypto ETFs expand; mining sector consolidates

·    Fixed Income: US yields soften on persistent Fed Chair speculation

·    Currencies: USD consolidates after hitting three-year low

·    Commodities: Steep weekly loss led by energy, grains and tired-looking gold