• Powell’s (Non-)Firing Shakes Markets
Yesterday market believed President Trump was firing Fed Chair Jerome Powell.
EUR/USD jumped 1.3% and US yields moved sharply.
Trump later denied it, and markets fully reversed the move.
This shows growing market resistance to political noise and headline risks.

• Macro Data in Focus
Producer Price Index came in softer than expected.
Consumer Price Index remains sticky, limiting Fed cut expectations.
Markets are currently pricing in just 15 basis points of easing for September.
Today’s data focus: US retail sales and TIC flows.
These could reveal long-term risks for the dollar if foreign appetite for US Treasuries is weakening.

• EUR/USD Stabilizes
After briefly touching 1.17 during the Powell scare, EUR/USD has settled back to the 1.16 range.
The European Commission’s proposed 2 trillion euro budget was rejected by Germany.
Lengthy negotiations are expected, with potential long-term implications for the euro.
Short-term, downside risks remain. A move toward 1.150 looks more likely than 1.170.

• UK Jobs Data Revised
The previously reported 109,000 payroll loss in May was revised to just 25,000.
June saw 41,000 job losses, confirming a softening labor market.
Wage growth remains elevated but is slowing on a three-month annualized basis to 3.6 percent.
The Bank of England may now feel less urgency to ease policy immediately.

• What’s Next?
The Powell scare was a stress test for markets. While the reaction was swift, the recovery was even quicker.
This incident highlights how central bank independence continues to be a fragile and politically sensitive topic.
Going forward, expect volatility to remain elevated as we approach key data releases and the US election cycle.