NIO and Japanese Automakers Face Tariff and Delivery Headwinds

The EUR/USD pair held steady on Monday ending the session almost unchanged. Despite negative momentum for the US dollar, the euro failed to extend gains, highlighting a cautious tone among investors.

The rally in EUR/USD was driven by the latest Nonfarm Payrolls (NFP) report, which came in weaker than expected. Further exacerbating market concerns, May and June job numbers were revised downward by a combined 258,000, casting doubt on the strength of the labor market.

In a highly unusual move, the head of the US Bureau of Labor Statistics (BLS) was reportedly dismissed, raising concerns about the credibility and consistency of official labor data. Adding to the turmoil, Fed Governor Adriana Kugler resigned, effective August 8, potentially giving President Donald Trump an opportunity to nominate a dovish replacement, with implications for future monetary policy direction.

The US Factory Orders report showed a 4.8% MoM decline in June, in line with forecasts but a stark reversal from May’s 8.2% surge. The drop was largely due to a collapse in commercial aircraft orders, though broader manufacturing remains under strain amid rising input costs and ongoing tariffs.

Across the Atlantic, the Eurozone’s Sentix Investor Confidence Index dropped sharply in August to -3.7, down from 4.5 in July, reflecting mounting concerns over economic conditions.

In a bid to ease tensions, the European Union announced a six-month suspension of trade countermeasures against the United States as part of ongoing negotiations to stabilize transatlantic trade relations.

With a light economic calendar ahead, traders will turn their focus to upcoming data releases, including the ISM Services PMI, Jobless Claims, and updated Consumer Sentiment figures, alongside speeches from Federal Reserve officials.

Gold prices extended their rally on Monday, rising for a third consecutive session as mounting expectations of U.S. Federal Reserve rate cuts buoyed investor sentiment. The yellow metal reached its highest level since July 24 amid signs of a cooling labor market and persistent inflationary pressures.

Gold’s recent rally followed disappointing U.S. jobs data, with July’s employment growth falling short of expectations and previous months’ figures revised significantly lower, fueling concerns over a weakening labor market.

According to the CME FedWatch Tool, markets now assign an 87.8% probability of a September rate cut, a sharp increase from just over 63% one week earlier. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making the metal more attractive in times of monetary easing.

Trade tensions remain in focus as U.S. President Donald Trump’s new tariffs take effect. According to an executive order, the administration has imposed new duties on a wide range of countries: 35% on Canadian goods, 50% on Brazilian imports, 25% for India, 20% for Taiwan, and 39% for Switzerland.

U.S. Trade Representative Jamieson Greer said on Sunday that these tariffs are expected to remain in place for the foreseeable future, potentially prolonging inflationary pressure on imported goods.

Oil prices fell on Monday to their lowest levels in a week as a fresh production hike by OPEC+ and weak demand signals from the United States deepened concerns about a growing global supply glut.

The producer group, which includes OPEC and its allies, announced it will increase output again in September — continuing a series of accelerated hikes that mark a full reversal of the deep cuts made during the pandemic. While the move was widely expected, it adds to bearish sentiment already brewing after U.S. data last week showed gasoline demand at its weakest level for May since 2020, traditionally the start of the summer driving season.

U.S. oil production also hit a record high, compounding oversupply worries as traders now brace for the possibility that OPEC+ may unwind an additional 1.65 million barrels per day of cuts at its next meeting on September 7.

Geopolitical tensions also played a role in shaping market sentiment. Investors are weighing the impact of new U.S. tariffs on dozens of trading partners, alongside the potential for secondary sanctions on buyers of Russian oil. U.S. President Donald Trump reiterated threats to penalize countries, including India, for continuing oil purchases from Russia, vowing to raise tariffs in response.

U.S. equities climbed on Monday, recovering from Friday’s sharp selloff as growing expectations for a Federal Reserve rate cut and continued strength in technology stocks helped restore investor confidence.

The rebound followed a turbulent end to last week, when the US 500 posted its worst daily decline in over two months after President Donald Trump signed an executive order imposing sweeping tariffs on nearly 70 countries. Adding to the volatility, a weaker-than-expected July jobs report, along with steep downward revisions to May and June figures, rattled markets.

Investors, however, saw the soft labor market data as a signal that the Fed could be prompted to lower interest rates sooner rather than later.

Technology stocks once again led the charge higher, supported by ongoing enthusiasm around artificial intelligence and solid corporate earnings. Shares of NVIDIA, Microsoft, and Meta Platforms all rose, with Microsoft and Meta extending gains after delivering strong quarterly results last week. The rally in tech underscored investor confidence in the sector’s leadership as markets adjust to a new monetary policy backdrop.

Looking ahead, the focus shifts to a busy earnings week, with over 150 companies set to report results. Investors are closely watching for updates from major players across the technology, industrial, and consumer sectors. The tone of this reporting season has so far been largely positive, reinforcing sentiment around a sustained rally in equities.

Markets will now turn their attention to upcoming economic data and the Fed’s policy signals, with investors weighing the impact of recent tariffs, weakening labor figures, and a potential shift in U.S. central bank strategy.