Fed Split, Trump Tariffs Shake Markets, Mortgage Demand Surges

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

US Dollar        1.3560-1.3800

Euro                 1.5910-1.6170

Sterling            1.8450-1.8700

WTI Oil (opening level) $67.86

The CAD/USD is opening at 1.3681 ( 0.7309 )

Headlines

·    Minutes from the June FOMC meeting showed an emerging divide among Fed officials over the outlook for interest rates, driven largely by differing expectations for how tariffs might affect inflation.

·    Trump unveiled a new round of tariff demand letters, including a 50% rate on Brazil—a country with which the U.S. recorded a goods trade surplus in 2024—citing the treatment of former President Jair Bolsonaro as justification. The move underscores the growing risk that Trump is willing to weaponize tariffs to address virtually any issue that captures his attention, trade-related or not.

·    Trump also announced a 50% tariff on copper imports starting August 1—a move that, given the U.S.’s heavy reliance on foreign supply, could drive up the cost of everything from appliances, electronics, and automobiles to home repairs, construction, and even electricity bills.

·    Most Fed officials see a rate cut as likely this year, citing temporary inflation pressures and potential economic softening, June FOMC minutes show. Some support an early cut, while others prefer no change in 2025.

·    US mortgage applications jumped 9.4% in early July, the biggest weekly gain in a month, per Mortgage Bankers' Association data. It marked a third straight weekly rise—the longest streak since December 2024—as mortgage rates fell to their lowest since April.

·    China’s consumer prices rose 0.1% in June, ending a three-month decline and beating expectations of no change. It was the first annual inflation uptick since January, driven by e-commerce sales, government subsidies, and easing U.S. trade tensions.

Key Points

·    Equities: Nvidia hits $4T; EU trade deal hopes lift DAX/CAC; WPP profit warning

·    Volatility: VIX down to 15.9; calm ahead of CPI; ETF flows turn defensive

·    Digital assets: BTC record highs; ETH surges; IBIT/ETHA inflows strong

·    Fixed Income: US Treasuries bounce on successful auction, with 30-year auction on tap today

·    Currencies: Dollar trading mixed; the BRL tumbles on Trump tariff attack

·    Commodities: Trump confirms 50% tariffs on copper; gold finds a fresh bid