Morning Juice – Europe Session Prep

European assets found support after ECB President Lagarde defended last month’s rate hike, saying the central bank had acted correctly in raising borrowing costs. Her comments reinforced expectations that policymakers remain focused on containing inflation despite signs of a broader slowdown in price pressures.

In FX, the Yen stayed in focus as Japanese Finance Minister Katayama reiterated that authorities can take “appropriate action” in the currency market at any time, keeping intervention risks firmly on traders’ radar amid persistent Yen weakness.

Oil steadied in thin trading near recent lows as tanker traffic through the Strait of Hormuz continued to increase, adding to short-term supply availability while negotiations between the US and Iran progressed.

In the US, attention remained on the Fed as Trump said Chair Warsh may struggle to persuade fellow policymakers to follow his preferred policy path. Trump and his allies are also renewing efforts to reshape the central bank after the Supreme Court blocked an attempt to remove Governor Lisa Cook, highlighting ongoing political scrutiny of the Fed.

Meanwhile, China’s central bank cut its government bond purchases in June to the smallest amount in nine months, a sign policymakers may be growing more cautious about further declines in yields and the risks of excessive liquidity in the financial system.