EU and US Strike Landmark Trade Deal with 15% Tariff Agreement

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

US Dollar        1.3620-1.3860

Euro                 1.5860-1.6120

Sterling            1.8300-1.8540

WTI Oil (opening level) $65.97

The CAD/USD is opening at 1.3723 ( 0.7287 ) 

The US dollar is generally firmer after a bout of weakness last week, although the strong Euro has kept the dollar index relatively subdued. Sterling firmed slightly overnight after a extended weakness last week, with EURGBP hitting its highest level since late 2023 overnight before retracing most of that move.

Headlines

·    US President Trump announced a deal with the EU involving a 15% tariff, with the EU agreeing to buy $750 billion in US energy, open all markets, purchase US military equipment, and make $600 billion in US investments. He claimed it's the biggest deal ever, benefiting cars and agriculture. Additionally, deals with three to four other countries are being explored, with confirmation letters expected soon.

·    SCMP reported that China and the US will pause tariffs for another 90 days, ahead of talks in Stockholm today.

·    China's trade surplus expanded to $114.77 billion in June 2025, surpassing last year's $98.94 billion and market expectations of $109 billion, as exports rose 5.8% year-on-year, beating the 5.0% forecast. Imports increased by 1.1%, slightly below the 1.3% expectation, but rebounded from May's 3.4% decline.

·    The US reported Friday that US durable goods orders dropped 9.3% in June 2025 to $311.84 billion, reversing May's revised 16.5% increase and doing better than the expected 10.8% decline. Transport equipment orders fell the most (-22.4%), notably nondefense aircraft and parts (-51.8%) and nondefense capital goods (-24%). 

Key Points

·    Equities: US records streak; EU trade deal; big earnings ahead.

·    Volatility: VIX drops; SPX expected move ±0.6% (Mon), ±1.3% (week)

·    Digital assets: BTC near $119k; ETH above $3.9k; IBIT/ETHA dip slightly

·    Fixed Income: JGB yields dip to start week. US treasuries await macro data later this week

·    Currencies: USD sell-off overnight reverses. JPY very weak and GBP increasingly weak

·    Commodities: Gold and silver have reversed the surge of early last week. Oil rangebound.