Global financial markets regained some footing at the start of August, bolstered by growing expectations of a Federal Reserve rate cut after surprisingly weak U.S. employment data. Meanwhile, oil prices dip as OPEC+ confirmed a fresh output increase for September, and the legal battle over former President Trump’s sweeping tariffs continues to unfold in U.S. courts, creating further uncertainty for global trade.
U.S. Job Data Weakens, Rate Cut Expectations Rise
On August 2, the U.S. reported non-farm payrolls for July that came in well below expectations, while figures for May and June were revised downward. This bolstered speculation that the Federal Reserve could begin cutting interest rates as soon as September, leading to a bounce in global equities and relative calm across currency markets. European indices such as the STOXX 600 gained around 0.5%–0.6% in early August, and the U.S. dollar softened slightly against major peers.
Trump Tariffs Face Key Legal Test
In late May, the U.S. Court of International Trade ruled that Trump-era tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unlawful and revoked them permanently. However, the Biden administration appealed, and a temporary stay was granted by the Federal Circuit Court, keeping the tariffs in place during the ongoing legal review.
As of August, a new wave of tariffs took effect—most notably, a 35% duty on Canadian imports—while other tariffs on foreign goods are scheduled to phase in over the following week. The Federal Circuit heard arguments in late July questioning the legality of these measures under IEEPA, with legal experts suggesting the case could eventually reach the Supreme Court. Should the tariffs be invalidated, importers may seek reimbursement, but such a process could take months or years.
OPEC+ Proceeds with Output Hike, Oil Prices Dip
On August 3, OPEC+ announced it will increase oil production by 547,000 barrels per day in September, following previous increases in May, June, and August. The decision reflects confidence in global economic momentum and tight inventories, though the alliance signaled it may adjust policy depending on future demand.
The announcement pushed Brent crude prices down 1.2% to around $68.8, with WTI crude dropping to approximately $66.5. Goldman Sachs maintained its forecast of $64 for Brent crude in Q4 2025 and $56 in 2026, warning of downside risks due to rising inventories, softening demand, and the lingering threat of a global slowdown.
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