2025-07-25 10:50

BRUSSELS, July 25 (Reuters) - The European Union could hit the United States with counter-tariffs on 93 billion euros ($109 billion) worth of U.S. goods if the two sides fail to reach a trade deal by Washington's August 1 deadline for imposing import levies. The European Commission has prepared two sets of possible counter-tariffs, which would be combined into one and submitted for approval to EU members. They would not be imposed until August 7. Sign up here. For the full list of tariffs and items, please see here , opens new tab. BAN ON SCRAP METAL SALES * The EU would also ban direct and indirect sales of scrap aluminium and scrap ferrous waste, which includes steel and iron. * The ban would take effect from September 7. EU COUNTERMEASURES TO STEEL, ALUMINIUM TARIFFS * EU members agreed a first package in April, but the measures were immediately suspended. * The package hits imports of U.S. goods worth 21 billion euros and is designed as a response to U.S. tariffs on steel and aluminium. * The package sets a 25% tariff on most of the imports, but some goods like diamonds would be hit by a lower duty of 10%. * The products include a range of agricultural goods: poultry, beef, fruit, cereals such as wheat, barley and oats, vegetable oils, corn (maize), rice and orange juice. * Other goods include home appliances such as dishwashers and vacuum cleaners, sanitary products like toilet paper and dental floss, and larger items like motorcycles and motor boats. * Soybeans and almonds are on this list at 25%, but would not be impacted until December 1. EU COUNTERMEASURES TO BASELINE, CAR TARIFFS * The second package is designed to respond to so-called "reciprocal" baseline tariffs, which U.S. President Donald Trump has threatened to raise from 10% to 30%, as well as to tariffs on cars and car parts, currently set at 25%. * The proposal was reduced to additional import duties on 72 billion euros of U.S. goods from an initial 95 billion euros. * The tariff levels will mirror U.S. levels but the majority are set at 30%, including for aircraft. * The tariffs would come into effect in two phases on September 7 and February 7. * The package targets 6.4 billion euros of agri-food products and 65.8 billion euros of industrial goods. * Industrial items in the package include aircraft and aircraft parts, cars and car parts, machinery, chemicals and plastics, medical devices and electrical equipment. * Food items in the package include bourbon, other spirits, wine, farm animals, bees, tobacco and pet food. * 159 items were deleted from the initial list after a public consultation, according to a Reuters comparison of the two lists. * Industrial products removed include all gas turbines, most magnets, all laboratory reagents, some photographic film, musical instrument strings, and some equipment related to semiconductors and data storage. * Removed food products include soya bean seeds, pure-bred breeding horses and bovine semen. ($1 = 0.8530 euros) https://www.reuters.com/sustainability/boards-policy-regulation/whats-eus-countermeasures-us-tariffs-2025-07-23/

2025-07-25 10:39

MOSCOW, July 25 (Reuters) - The Russian central bank cut its key interest rate by 200 basis points to 18% on Friday, as expected, and lowered its 2025 inflation forecast to between 6% and 7% from between 7% and 8%, as data showed that inflation was slowing down. The decision was in line with a Reuters poll of 27 economists. The cut is intended to revive lending and boost economic growth, which is expected to slow down sharply this year. Sign up here. "Current inflationary pressures, including underlying ones, are declining faster than previously forecast. Domestic demand growth is slowing. The economy continues to return to a balanced growth path," the central bank said in a statement. Russia's consumer price index fell by 0.05% in the latest week, marking weekly deflation for the first time since September 2024, which set the stage for the central bank's decision, although the regulator says it is looking at longer-term trends. The central bank maintained its gross domestic product growth forecast at between 1% and 2%. The economy grew by 4.3% in 2024. The decrease brought overall price growth this year to 4.56%, compared with 5.06% for the same period last year. Annualized inflation slowed to 9.17% from its peak of 10.3% in March. The regulator was under intense pressure from the business community to start easing after it hiked the key rate to the highest level since early 2000s last year. Business leaders complained that at such a rate, investment no longer made sense. Despite this pressure, President Vladimir Putin backed the central bank's policy, but warned it not to overcool the economy. The rouble, which rallied by 45% against the U.S. dollar earlier this year in part due to the high key rate, has begun to weaken ahead of the expected rate cut and touched the 80 mark against the dollar on Friday. https://www.reuters.com/markets/europe/russian-central-bank-cuts-key-rate-by-200-bps-inflation-subsides-2025-07-25/

2025-07-25 10:20

MUMBAI, July 25 (Reuters) - The Indian rupee fell to a one-month low on Friday, and logged its third straight weekly decline, pressured by outflows from local stocks and caution among investors ahead of a news-heavy week dominated by tariffs and central bank decisions. The rupee closed at 86.5150 against the U.S. dollar on Friday, down 0.4% on the week. The local currency hit a low of 86.6250 earlier in the session, its weakest level since June 23. Sign up here. India's benchmark equity indexes, the BSE Sensex (.BSESN) , opens new tab and Nifty 50 (.NSEI) , opens new tab, fell about 0.9% each, weighed down by a fall in global equities alongside worries over weak corporate earnings and a delayed U.S.-India trade deal. Dollar sales from local private banks, likely on behalf of exporter clients, helped limit the rupee's losses, a trader at a Mumbai-based bank said. The dollar index was up 0.2% at 97.7 while Asian currencies declined by as much as 0.7%. Next week is poised to be eventful, with trade talks between U.S. and China, monetary policy decisions from the U.S. Federal Reserve and Bank of Japan, the reciprocal tariff deadline, and key U.S. economic data expected to keep traders on their toes. The odds of a rate-cut by the Fed are near-zero but investors will keep an eye on commentary from the Fed Chair and whether the decision is unanimous. "We maintain our view that the impact of tariffs will be transitory and that it will be appropriate for the FOMC to resume cutting interest rates gradually in September (by 25bp) with another 25bp cut in December," ANZ said in a Friday note. The chances of a rate cut in September are currently around 60%, per CME's FedWatch tool. Evolving rate cut expectations will also be in focus locally as cooling inflation has prompted calls for at least one more interest rate cut this year. The RBI slashed rates by 100 bps over the first half of the year. https://www.reuters.com/world/india/rupee-slides-third-straight-week-tariff-deadline-fed-decision-near-2025-07-25/

2025-07-25 10:14

July 25 (Reuters) - Shares in Valeo (VLOF.PA) , opens new tab fell over 16% in early Friday trading, after the French car parts supplier cut its annual sales forecast by at least 1 billion euros ($1.2 billion), blaming a weaker dollar and shrinking global car sales volumes. The designer and producer of driving assistance systems said late on Thursday it expected sales of around 20.5 billion euros this year, down from the 21.5-22.5 billion euros it forecast previously. Sign up here. As U.S. tariffs on foreign auto imports threaten carmakers' margins and sales volumes, Valeo CEO Christophe Périllat told analysts that the company would reap the benefits of a cost reduction programme. On Friday, Volkswagen (VOWG.DE) , opens new tab, one of Valeo's largest customers, cut its full-year sales and profit margin forecasts in its first assessment of the damage from U.S. President Donald Trump's trade war. Volkswagen shares reversed early losses and were up over 2% by 0950 GMT, with a Metzler analyst pointing to CEO Oliver Blume's assessment that the performance of its Porsche and Audi brands could reach a low point this year and recover in 2026. Valeo shares had trimmed early losses to trade down 6.6% at the same time. Several European companies flagged currency risks in their quarterly reports, after Trump's April 2 tariff bombshell triggered market turmoil and sent the safe-haven dollar tumbling. ($1 = 0.8518 euros) https://www.reuters.com/business/autos-transportation/valeo-shares-slump-car-parts-supplier-cuts-sales-forecast-2025-07-25/

2025-07-25 10:05

Political uncertainty surrounds Powell’s tenure amid Trump’s criticism Investors fear that firing Powell could undermine the Fed’s independence Powell's dismissal risks sparking volatility across asset classes A shadow Fed Chair could sow market confusion, but may be less disruptive for investors NEW YORK, July 25 (Reuters) - Uncertainty over Federal Reserve Chair Jerome Powell’s tenure is prompting investors to assess potential market reactions should there be an premature change in leadership at the U.S. central bank. President Donald Trump has repeatedly criticized Powell for not cutting U.S. rates quickly enough. He has frequently raised the possibility of ousting him before his term is up in ten months, while also saying that firing him would be "unlikely." Sign up here. Trump said on Thursday he had a "good meeting" with Powell after he visited the Federal Reserve's headquarters in Washington to tour the site of a $2.5 billion renovation of two historical buildings the White House criticizes as overly costly and ostentatious. He said it is not necessary to fire Powell. Investors have been considering various scenarios, including Trump dismissing Powell, the Fed chief stepping down, or a new nominee being named well before the scheduled end of Powell’s term. Forecasting how equities, the U.S. dollar, and Treasury yields would react to each outcome is difficult, market participants said. However, brief turbulence last week — when reports emerged that Trump was considering firing Powell — triggered a 0.7% decline in the S&P 500 and a 0.9% drop in the dollar, offering some clues to possible market reactions, they added. "Financial markets have sent clear warning signals about the consequences of political interference," Jack Ablin, chief investment officer at Cresset Capital, said. "YOU'RE FIRED" While deemed the most unlikely scenario, the biggest risk for markets is if Trump were to fire Powell. Such a move would be viewed as an assault on the independence of the Fed, something the market counts on, investors said. Based on the scale of gyrations markets recently experienced, strategists at Deutsche Bank estimate the dollar could tumble as much as 6%, potentially a record large drop. Deutsche Bank's strategists estimate the 10-year yield could jump up about 20 basis points while the 30-year yield could soar 45 basis points. On Thursday, the 10-year yield was at 4.413%, while the 30-year bond was at 4.942%. While equities might eventually find something to like in a new Fed Chair who might be more amenable to rate cuts, investors said stocks would likely initially sell off if Powell is shown the door. Cresset's Ablin said the drop in stocks would be more extreme than the less than 1% slide spurred by last week's reports on Powell's imminent firing. Ousting Powell would raise the risk that Trump would try to make an even bigger play to take over the Fed, David Seif, chief economist for developed markets at Nomura, said. "Loss of Fed independence would lead to a very big increase, I think, in inflation uncertainty, and that would lead investors to demand much more compensation for locking their money up for that long, leading to a much steeper yield curve," Seif said. Gold would be one asset that could benefit in the circumstance, Aaron Hill, chief analyst at broker FP Markets, said. The price of the safe haven metal, already near record highs set this year at around $3,400 an ounce, could leap higher, he said. Nor is the market going to draw much distinction between Powell being fired for cause or otherwise, investors said. "I QUIT" Should Powell resign, concerns about the Federal Reserve’s independence would linger, but markets may avoid a prolonged period of uncertainty that could arise from potential legal battles if Powell were dismissed. Powell has said he would refuse to leave office early even if Trump asked. While that might yield a slightly less volatile reaction in the near term, it will confirm apprehensions about the Federal Reserve straying from its dual mandate of maximum employment and stable prices, analysts said. The chair is only one of 12 voting members at the central bank's monetary policy meetings. Part of the role is to build consensus with a large group of policymakers. "I think that's telling you that Trump is willing to work that hard to break down the leader of the board ... that he's going to come after the rest of the board if they don't do what the new Fed chair basically does," Benjamin Ford, researcher at macro research and strategy firm Macro Hive said. "I think that almost cements Trump's view for interest rates." The dollar would be particularly vulnerable, hit with the double whammy of rate cuts and loss of investor confidence. "A politically compliant Federal Reserve could trigger severe and lasting market disruptions across multiple asset classes, fundamentally altering the global financial landscape," Cresset's Ablin said. SHADOW FED The most benign outcome for markets would be if Trump were to merely nominate a new chair and let Powell remain in place until his term expires in May. Treasury Secretary Scott Bessent said on Wednesday the Trump administration was not in a rush to nominate a new chair to replace Powell. The administration would likely announce a successor in December or January, he said. "I don't know that the equity market would necessarily view that negatively," Mark Hackett, chief market strategist at Nationwide, said. "You're obviously going to believe that the next person is going to be more dovish on average than Powell would be, but I think that assumption is there anyway," he said. An appointment who talks loudly about lowering interest rates could erode the value of the dollar, investors said. "It would probably weigh on the dollar more and more as we go through and towards the new Fed chair," Macro Hive's Ford said. While not as drastic as the other two scenarios, the presence of a shadow chair who offers potentially clashing views with the sitting central bank leader on monetary policy could sow confusion. Any choice deemed as being under Trump's thumb could do lasting damage to the public perception about the Fed's independence. "It's really hard to put the toothpaste back in the tube," Nationwide's Hackett said. https://www.reuters.com/world/us/investors-weigh-market-impact-possible-early-powell-exit-2025-07-25/

2025-07-25 09:54

LONDON, July 25 (Reuters) - The pound dropped to its weakest level against the euro in four months on Friday as a weekly decline in gilt yields on soft British data contrasted with higher European yields on expectations the European Central Bank is done with rate cuts. The euro reached as high as 87.27 pence, up 0.24% and approaching its April 11 peak of 87.38 pence, hit at the height of tariff-induced market turmoil. A break past that would take the euro to its highest since late 2023. Sign up here. The pound was also down 0.4% against the dollar at $1.3456. Data on Friday showed British retail sales for June were slightly below analysts' expectations, albeit rebounding from a sharp drop in May. They followed figures on Thursday showing UK business activity grew only weakly in July and employers cut jobs at the fastest pace in five months. The jobs data is the most important aspect of this, said Derek Halpenny, head of research global markets EMEA at MUFG, as rate setters at the Bank of England are most focused on the labour market. As a result, yields on British government bonds, or gilts, are set for small weekly falls across the curve, in contrast with European government bond yields, which are up sharply on signs of a U.S.-EU trade deal and hints from the ECB that it is done with interest rate cuts. This "notable divergence" is sending euro/sterling higher, said Halpenny. The BoE has hitherto been much more cautious about rate cuts than the ECB and most other European developed market central banks due to stubbornly high British inflation. The ECB has cut by 200 basis points since last year, in contrast to just 100 bps from the BoE. However, while ECB could now be done with easing, markets continue to anticipate two further 25 bps BoE cuts this year, and see around an 80% chance of the first of those at its early August meeting. Analysts say should UK inflation slow, the pace of cuts could accelerate. Though with inflation hitting its highest in a year in June, they say the BoE has a difficult balancing act. https://www.reuters.com/world/uk/sterling-four-month-low-against-euro-uk-euro-zone-rates-diverge-2025-07-25/