- US markets were closed for Independence Day.
- Ukrainian President Zelensky said he warned French President Macron about dangerous provocations by Russia at the Zaporizhzhia Nuclear Plant, while both Ukraine and Russia accused each other of preparing to attack the Zaporizhzhia Nuclear Plant overnight.
- Looking ahead, highlights include Australian AIG Manufacturing Index & Retail Sales, Japanese Services & Composite PMI, Chinese Caixin Services & Composite PMIs, Singapore Retail Sales.
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LOOKING AHEAD
- Highlights include Australian AIG Manufacturing Index & Retail Sales, Japanese Services & Composite PMI, Chinese Caixin Services & Composite PMIs, Singapore Retail Sales.
US TRADE
- US markets were closed for Independence Day.
FX
- USD traded sideways and retained the 103.00 status with price action restricted amid the holiday closure.
- EUR softened in which EUR/USD gradually retreated beneath 1.0900 amid pressure in EUR/GBP.
- GBP made early headway as GBP/USD extended above 1.2700 before fading most of the gains.
- JPY marginally strengthened as USD/JPY remains near speculated intervention-triggering levels.
GEOPOLITICAL
- Ukrainian President Zelensky said he warned French President Macron about dangerous provocations by Russia at the Zaporizhzhia Nuclear Plant, according to Reuters.
- Ukraine’s military said Russia placed objects resembling explosives on the 3rd and 4th power units of the Zaporizhzhia Nuclear Power Plant and accused Russia of preparing a terrorist attack overnight which would not damage the power units but could create the impression that Ukraine is shelling the nuclear plant. It was also reported that Russian agencies quoted an adviser to the head of Rosenergoatom who alleged Ukraine will attempt to attack the Zaporizhzhia station overnight using long-range precision equipment and attack drones, according to Reuters.
- Russian Foreign Ministry said there is no basis for renewing the grain deal and Russia is doing everything so that all ships covered by the grain deal can leave the Black Sea before the deal expires. Furthermore, it stated that proposals for a subsidiary of the state-owned Russian Agricultural Bank for grain deal purposes are "unworkable".
- UK armed forces chief rejected suggestions that Ukraine’s counter-offensive was proceeding slowly and stated that Russia had lost half of its combat capability in Ukraine, according to FT.
- US President Biden spoke with German Chancellor Scholz on Tuesday regarding preparations for the NATO summit, according to Reuters.
- Russia and Syria are to hold military drills in Syria from July 5th which will last 6 days, according to RIA.
ASIA-PAC
NOTABLE APAC HEADLINES
- Chinese President Xi said in a virtual Shanghai Cooperation Organisation summit that they should focus on practical cooperation and accelerate the economic recovery. Xi also said that they need to strengthen strategic communication and coordination, as well as respect each other's core interests and concerns, while he added they are willing to work with all parties to implement global security initiatives.
- Russian President Putin said in the Shanghai Cooperation Organisation virtual meeting that risks of a global economic crisis are on the rise and that they plan to boost ties with the Shanghai Cooperation Organisation, while he supports the transition to settlements in local FX.
- China's Commerce Ministry is to meet with major gallium and germanium producers in Beijing on July 6th, according to Reuters citing sources. It was also reported that China’s Commerce Minister hopes that Japan will jointly protect stable industry supply chains with China.
- Chinese senior official close to the Commerce Ministry told FT there will be more retaliatory measures against the snowballing semiconductor export controls from Western countries.
- German Economy Minister Habeck said Germany would have a big problem if China extended export controls to items such as lithium.
- Dutch Foreign Ministry said it is still unclear what the impact of the new Chinese export restrictions will be and that it is primarily up to the EU to respond to China’s trade policies, according to Reuters.
- Beijing pushed back a planned trip by EU's Borrell to China which had been scheduled for July 10th.
- PBoC Vice Governor Guo Shuqing was removed from his post, according to China's Human Resources Ministry.
EU/UK
NOTABLE HEADLINES
- BoE is considering a clampdown on foreign bank branches and is looking at plans to force more international banks to set up subsidiaries in the UK, according to FT.
- UK PM Sunak said inflation is proving more persistent than expected but that does not mean that the policy options they have are the wrong ones, while he added that he supports the BoE.
- UK Chancellor Hunt said financial regulator FCA has his full backing to ensure banks are passing on increased interest rates to savers.
- UK Financial Services Minister Griffith said demand for UK government bonds remains very strong, while he also stated that they should proceed cautiously regarding a central bank digital currency, according to Reuters.
- ECB's Nagel said the rate September decision is to depend on new data, according to NTV.
