Asia-Pacific markets opened the crucial week on a muted note as Japan’s holiday and a light global calendar limited trading activity despite major weekend trade and political developments. The U.S. Dollar stayed under pressure after a weak week, U.S. stock futures edged higher, and shares in India, China, Australia, and New Zealand posted mild gains without strong momentum.
Tensions between Russia and the U.S. dominated headlines, with the Wall Street Journal (WSJ) and Financial Times (FT) reporting Moscow’s refusal to bow to U.S. pressure ahead of the meeting between U.S. President Donald Trump and Russian President Vladimir Putin. FT noted Putin wants to keep dialogue open but has no intention of ending the war soon, while WSJ said he told U.S. envoy U.S. Witkoff he would agree to a cease-fire only if Ukraine withdrew forces from all of Eastern Donetsk. In the Middle East, Iran blocked International Atomic Energy Agency (IAEA) inspections after recent strikes and demanded new terms, adding to tensions as Trump pushes for total denuclearization of North Korea and Iran. Fears of Israel’s full takeover of Gaza persisted, with a U.S. Defense official confirming readiness to activate part of the Washington D.C. National Guard if ordered by Trump.
On the trade front, U.S. Treasury Secretary Scott Bessent told Nikkei Asia the U.S. aims to conclude trade deals with Canada, Mexico, and Switzerland by October to offset the impact of new duties. Washington is also considering secondary sanctions and steep tariffs on countries importing Russian crude — including India, China, and Brazil — after imposing 50% tariffs on India last week. Trump further pressed China to quadruple imports of U.S. soybeans.
China’s weekend data showed July’s factory-gate prices (Producer Price Index, PPI) fell more than expected while consumer prices were flat, signaling weak demand and trade uncertainty. Separately, China South City was ordered to liquidate, becoming the largest property developer by assets to collapse since China Evergrande Group. In corporate news, FT reported Nvidia and AMD will give 15% of China chip sales revenue to the U.S. for export licenses, though tech sentiment held firm.
Policy signals remained mixed. U.S. Federal Reserve Governor Michelle Bowman added to dovish comments weighing on the Dollar, while Fed’s Musalem sounded slightly hawkish. Bank of England (BoE) Chief Economist Huw Pill noted a shift in inflation risk balance, slowing last week’s British Pound (GBP) rally after Governor Andrew Bailey’s hawkish tone and a softer Dollar. In New Zealand, Prime Minister Christopher Luxon said U.S. tariff relief is unlikely, with NZ exports facing 15% duties. Canada’s employment data disappointed, but Prime Minister Mark Carney noted wage growth is outpacing Consumer Price Index (CPI) inflation, while condemning Israel’s Gaza plans.
In markets, the U.S. Dollar stayed weak, helping major currencies and commodities hold last week’s gains. Crude oil hovered at a two-month low, breaking a seven-day losing streak but lacking recovery momentum amid oversupply fears and weaker demand from tariff disputes, even as geopolitical tensions threatened supply. Gold eased slightly, cryptocurrencies and equities edged higher, and Antipodean currencies such as AUD/USD and NZD/USD, along with USD/CAD, traded without clear direction.
EURUSD and GBPUSD posted mild gains as the U.S. Dollar stayed weak, holding on to last week’s strong rally despite a quiet market. USDJPY traded sideways after ending a two-week downtrend, weighed by uncertainty over the Bank of Japan’s (BoJ) next steps, U.S.-Japan trade deal concerns, and political tensions following Prime Minister Ishiba’s party’s heavy loss in national elections.
The European Central Bank (ECB) has recently toned down its dovish stance, while Bank of England (BoE) Chief Economist Huw Pill highlighted inflation risks from tariffs, softening last week’s hawkish rate cut and upbeat comments from Governor Andrew Bailey. Optimism over the EU-U.S. trade framework and progress on the U.S.-UK trade deal further supported EURUSD and GBPUSD. In contrast, Japan’s failure to secure favorable terms from the U.S. kept USDJPY traders cautious, especially during Japan’s Mountain Day holiday.
China’s mixed inflation figures and uncertainty over the future of the U.S.-China trade deal, despite both sides being willing to delay tariff deadlines, weighed on AUD, NZD and CAD. Sentiment was further pressured by concerns that Australia, Canada, and New Zealand may not secure additional tariff concessions from the U.S., alongside the dovish tone from their central banks. Late last week, Canadian Prime Minister Mark Carney downplayed worries over soft employment data and rising inflation risks, while expressing optimism about reaching a favorable trade deal with the U.S., though no firm progress was reported.
Crude oil held near its two-month low, pausing a seven-day losing streak but showing no recovery momentum. The commodity ignored supply risk headlines from Iran, Gaza, and Russia, focusing instead on the OPEC+ output increase and U.S. President Donald Trump’s push for higher production, while also overlooking the latest drop in U.S. inventories.
Gold pulled back from a two-week high, ending a two-day winning streak as markets consolidated. The metal still benefited from a weaker U.S. Dollar and safe-haven demand driven by trade and political tensions, along with a dovish U.S. Federal Reserve outlook. However, concerns over reduced Chinese demand — due to higher equity returns and strained U.S.-China relations — could limit XAUUSD gains.
Cryptocurrencies advanced on the Trump administration’s push for industry-friendly policies, including an executive order to add crypto to 401(k) retirement plans. Weekend developments, such as El Salvador approving a crypto bank and strong buying by pro-crypto firms, further boosted Bitcoin (BTC) and Ethereum (ETH) prices.
With Japan’s holiday and caution ahead of key events — including U.S. Inflation, Reserve Bank of Australia (RBA) decision, China Retail Sales, and employment data from the U.K. and Australia — markets started Monday with limited momentum.
Focus will also be on the Trump-Putin meeting, the U.S.-China tariff extension, and Israel’s moves in Gaza for fresh direction.
The quiet trade could let the U.S. Dollar recover recent losses, especially if U.S. equities pull back and Federal Reserve (Fed) officials pause their dovish tone.
Any progress in easing U.S. trade and political tensions or in Russia-Ukraine peace could further lift the Dollar, pressuring Gold and crude oil.
However, headlines on Iran, Gaza, and Russia may overshadow U.S. inventory data and, alongside the OPEC+ output increase, weigh on energy prices.
Cryptocurrencies are likely to stay firm, supported by global demand for digital reserves and the Trump administration’s favorable stance toward the sector.
May the trading luck be with you!
