The euro rose in European markets on Thursday against a basket of global currencies, extending its gains for a fifth consecutive day against the US dollar and reaching its highest level in two weeks. This advance was supported by continued weakness in the US currency, ahead of the European Central Bank’s upcoming policy decisions.

The ECB is widely expected to leave interest rates unchanged following its seventh consecutive cut at the previous meeting. Markets are now watching closely for additional signals regarding the possibility of resuming the monetary easing cycle during the remainder of the year.

The Price

The euro rose 0.1% against the dollar to $1.1780 — its highest level since July 7 — up from today’s opening price of $1.1767, with an intraday low of $1.1762.

The euro had already closed Wednesday up 0.1% against the dollar, marking a fourth consecutive daily gain, amid optimism over a potential trade agreement between the European Union and the United States.

US Dollar

The US Dollar Index declined by 0.1% on Thursday, deepening its losses for the fifth consecutive session and hitting a two-week low of 97.10, reflecting ongoing weakness of the greenback against a basket of major and minor currencies.

This latest drop follows news that President Donald Trump is expected to visit the Federal Reserve later today. It remains unclear whether Trump — who has repeatedly criticized Jerome Powell for not cutting US interest rates more aggressively — will meet with the Fed Chair.

European Central Bank

The ECB will conclude its fifth policy meeting of 2025 later today, with expectations pointing to a pause in rate cuts. The upcoming statement is anticipated to provide further guidance on the future trajectory of interest rates through the rest of the year.

Current expectations suggest the ECB will keep rates unchanged at 2.15% — the lowest level since October 2022 — following the seventh consecutive cut in the previous meeting.

The interest rate decision and policy statement are due at 13:15 GMT, with ECB President Christine Lagarde set to speak at the press conference at 13:45 GMT.

Euro Outlook

Here at Economies.com, we expect that if the ECB’s commentary proves more hawkish than expected, the likelihood of another rate cut before year-end could diminish, leading to further gains for the euro against a basket of global currencies.

The Japanese yen rose in Asian markets on Thursday against a basket of major and minor currencies, extending its gains for a fourth consecutive day against the US dollar and reaching its highest level in two weeks, as safe-haven buying of the currency gained momentum amid political uncertainty in Japan.

Local media reports indicated that Prime Minister Shigeru Ishiba was preparing to announce his resignation to take responsibility for the ruling party’s sweeping defeat in the House of Councillors elections.

The Price

The yen strengthened as the dollar fell 0.45% to ¥145.85 — its lowest level since July 10 — down from today’s opening at ¥146.50, with an intraday high of ¥146.52.

The yen had already risen by about 0.1% against the dollar on Wednesday, marking a third consecutive daily gain, following the announcement of a major trade agreement between Japan and the United States.

Political Developments

Prime Minister Shigeru Ishiba denied plans to resign after local media had reported his intention to step down over the ruling party’s severe election loss.

“I strongly shared a sense of crisis with former prime ministers, but I have not discussed resigning at all,” Ishiba stated.

Opinions and Analysis

Carol Kong, currency strategist at the Commonwealth Bank of Australia, said the yen will continue to face headwinds due to persistent political uncertainty.

“We still don’t know what Prime Minister Ishiba intends to do… so I think there remains some ambiguity surrounding Japan’s fiscal outlook and the Bank of Japan’s policy,” Kong added.

Interest Rate Outlook

Market pricing for a potential 25-basis-point rate hike by the Bank of Japan at next week’s meeting remains steady below 35%.

Investors are awaiting further data on inflation, unemployment, and wage levels in Japan before reassessing those odds.

The large trade deal between Japan and the United States has given the Bank of Japan added flexibility to raise interest rates before the end of the year.

Most major US stock indexes rose at the opening of Wednesday's session, with the S&P 500 hitting a new all-time high following the announcement of a trade deal between the United States and Japan.

US President Donald Trump announced a trade agreement with Japan that includes reciprocal tariffs of 15% on exports between the two countries. He also confirmed that Washington is seeking a trade deal with the European Union, with the current mutual tariff suspension set to expire in early August.

Later today, specifically after the close of the session, both Tesla and Alphabet are scheduled to report their second-quarter earnings for 2025.

As of 15:15 GMT, the Dow Jones Industrial Average rose by 0.4% (173 points) to 44,675 points. The broader S&P 500 index climbed 0.2% (13 points) to 6,323 points, while the tech-heavy Nasdaq Composite edged up by less than 0.1% (3 points) to 20,896 points.

Nickel prices rose slightly during Wednesday trading, supported by a stronger US dollar against most major currencies, as well as mixed forecasts for the industrial metal.

According to a new analysis released this week by UBS, the global nickel market is expected to remain in surplus until 2026, despite recently announced production cuts.

The report noted that the market experienced a "significant surplus" from 2022 to 2024, adding that current nickel prices and market trends already reflect these weak fundamentals. Analysts do not expect a near-term recovery in demand, citing reduced stainless steel production and low probability of a rebound in battery demand growth.

Some progress has been made on the supply side toward rebalancing the market in 2024, with production cuts totaling around 250,000 tonnes and project delays totaling about 140,000 tonnes. However, UBS views these measures as insufficient, given that Indonesia continues to expand output capacity despite some raw material constraints.

While global nickel demand has shown relative resilience compared to other base metals in recent years, oversupply has led to production cuts in the stainless steel sector in both China and Indonesia. UBS expects nickel demand growth to remain strong at 4% to 5% annually from 2025 to 2028, compared to 9% annually between 2021 and 2024.

Although UBS forecasts a smaller market surplus during the 2025–2028 period, it is still expected to be “large enough to contribute to further buildup in refined nickel inventories on the London Metal Exchange (LME).” The report noted that current LME nickel prices are situated in the upper quartile (75%) of the cost curve, a level that has historically supported prices. However, UBS warned that nickel has previously traded within the cost curve for extended periods.

Second Half Outlook

Analysts now expect nickel prices to rebound sharply in the second half of 2025, driven by nickel ore shortages and the closure of several mines in Indonesia.

In mid-June 2025, the Indonesian government revoked mining licenses for several nickel mines after it was revealed that extraction operations were taking place on legally protected islands where mining should not be permitted. Although the four mines represented a small portion of Indonesia’s total annual output, they accounted for a large share of the country’s remaining high-grade nickel ore deposits.

Declining ore quality in Indonesia, particularly in medium- and high-grade reserves, had already begun to negatively affect the production of nickel pig iron (NPI) even before the mining ban.

Separately, EU member states agreed on a sweeping update to customs procedures, aimed at adapting to digital and global trade developments.

However, the first changes are not expected to take effect until 2028 and will initially be limited to e-commerce companies, as part of a long-term plan to overhaul the European customs framework.

Meanwhile, the US dollar index rose by 0.1% to 97.4 points at 15:00 GMT, reaching a high of 97.6 and a low of 97.3.

As for trading, spot nickel contracts rose 1.2% to $15,500 per tonne as of 15:11 GMT.