Week Ahead — Tariff Pause Due! What’s Next for the US Dollar and Stock Market?

Weekly Market Outlook (July 7th – July 11st)

Global equity markets extended their gains last week, driven by improved sentiment as geopolitical tensions eased, U.S.–China trade negotiations showed signs of progress, and the U.S. labor market remained resilient in June. The S&P 500 and NASDAQ both surged to fresh record highs, reflecting solid risk appetite among investors.

Despite strength in equities, the currency market remained relatively muted. The U.S. Dollar remained under pressure even as stocks rallied—highlighting the ongoing divergence between equity optimism and dollar weakness.

Tariff Pause Due! What’s Next for the US Dollar and Stock Market?

As markets enter the week of the July 9 expiration of the 90-day tariff pause, investor attention is sharply turning back to global trade risks.

While trade negotiations with several countries are ongoing and appear constructive, uncertainty surrounding potential surprise actions from the Trump administration remains high.

This introduces a two-side outcome for markets: progress could further lift equities, while any unexpected tariff move could trigger renewed volatility across asset classes. Investors should stay alert for developments from Washington, as headline-driven swings are highly likely this week.

Key Economic Data & Events

While market attention is undoubtedly fixated on the looming July 9 deadline, it’s important not to overlook several key economic events this week that may also shape market sentiment. From the RBA rate decision and FOMC minutes, to China’s latest inflation figures.

These data points could inject fresh volatility across FX, commodities, and equities market.

1. RBA Rate Decision – 8th July

Markets are on edge about whether the RBA could signal another rate hike in 2025 or stick with a hawkish hold. A surprise move or a more aggressive tone could boost the Australian Dollar, while a dovish signal may do the opposite.

2. RBNZ Rate Decision – 9th July

While no change is expected, any forward-looking commentary on inflation and growth risks will impact NZD sentiment. A shift toward easing could weaken the Kiwi, while a prolonged hawkish tone could trigger a rebound.

3. China Consumer & Producer Price Index – 9th July

These inflation metrics are crucial for assessing domestic demand and deflation risks in the world’s second-largest economy. Weak inflation could increase pressure on Beijing for more policy support, impacting commodity demand, Asian currencies, and global risk sentiment.

4. US Tariff Pause Deadline – 9th July

This could reignite global trade tensions, especially if no further extension or resolution is announced. Any escalation could trigger market volatility, weigh on global equities, boost safe-haven assets like gold and yen, and further weaken the already fragile U.S. Dollar.

Key Takeaway for the Week

Markets face a critical test as optimism from last week’s equity rally now meets a heavy dose of uncertainty. With the July 9 tariff deadline looming and key central bank decisions and inflation data on deck, volatility risk remains elevated.

While equity momentum remains strong, the U.S. Dollar’s persistent weakness, coupled with fragile trade sentiment, could make markets vulnerable to sharp reversals if surprises emerge. Investors should stay nimble and closely monitor headline risks as these developments may shape the next phase of global market direction.