A Note Before We Start
The main funeral procession for slain Supreme Leader Ayatollah Ali Khamenei is scheduled for Monday 6 July in Tehran, with ceremonies running through to Thursday of this week including processions in Iran and Iraq. Iran has formally paused diplomacy with the United States for the duration of the funeral, and Iran issued a fresh warning for vessels to follow Tehran-designated routes through the Strait of Hormuz, as a growing number of ships have been using a route close to the Omani coast, threatening Tehran's leverage over the waterway. This creates a structurally unusual market week: the dominant geopolitical negotiating process is on a politically-enforced pause, Hormuz passage is creeping higher but under active Iranian warning, and markets will be watching funeral imagery and Iranian political signals as closely as any economic release on the calendar. The UK Labour leadership nomination window opens Wednesday 9 July, with Andy Burnham the only declared candidate. Read the geopolitical and currency sections carefully before touching GBP or oil positions on Monday.
The Big Picture
The macro story entering this week has shifted from a military exchange between the US and Iran to something more nuanced and arguably harder to trade: a diplomatic pause imposed by death and grief, operating on top of a geopolitical framework that remains deeply contested. After two days of diplomatic talks, Iranian officials left Doha as Tehran prepared for the multi-day funeral, with Qatar confirming those talks made "positive progress" and that further discussions will be scheduled at the earliest possible time after Khamenei's funeral. The Wall Street Journal reported that Trump, when presented with a full range of options to restart the war on Iran, told his advisers he preferred to give diplomacy a chance and was willing to extend the 60-day truce if needed. That is a meaningful signal. The president is not looking for a fight this week.
Underneath the geopolitical layer, the week's economic narrative has been transformed by Thursday's NFP print. The Labor Department reported that the US economy added 57,000 jobs in June, missing estimates for around 110,000 and marking the softest reading since February's negative print, with prior months also revised lower and May's gain cut to 129,000 from 172,000. The unemployment rate ticked down to 4.2%. This was not a headline soft jobs number masking health beneath - it was soft top to bottom, with the participation rate also falling. Traders responded immediately, lowering bets on a September rate hike, with the probability of a hike dropping to 50%, down from 66% before the report.
The base case for the week: the Khamenei funeral period runs without incident, diplomacy resumes by Thursday at the earliest, WTI oil holds in the $67-$71 range, gold consolidates its NFP-driven recovery in the $4,100-$4,250 range, the dollar remains soft on reduced rate-hike expectations, and sterling finds a partial floor as Burnham's policy reassurances are absorbed by markets. The FOMC minutes on Wednesday provide the week's primary rate-hike recalibration moment, with June Services PMI on Monday and ADP on Tuesday framing the picture before that.
Alternative scenario one: the Khamenei funeral produces a political consolidation within Iran that empowers hardliners. Taking the IRGC's prominence since the war began into account, the successive US-Israeli attempts to decapitate the regime have led to the rise of more hard-line elements, analysts say. A hardliner-driven shift in Iran's negotiating posture after the funeral - particularly on Hormuz tolls or control - would immediately reverse the partial peace trade in oil and re-introduce the safe-haven premium in gold and JPY that markets have been slowly pricing out. If that scenario arrives, oil gaps toward $75-$78 within sessions and gold challenges $4,350.
Alternative scenario two: diplomacy resumes cleanly after the funeral, Burnham is confirmed unopposed as Labour leader on 16 July, the FOMC minutes confirm the Fed's data-dependence and September hike is fully priced below 50%, and the dollar enters a sustained softening period. In that environment, EUR/USD challenges 1.1550, gold moves toward $4,300-$4,350, silver reclaims $65, and GBP/USD recovers toward 1.35. This is the scenario that punishes any residual dollar long positions and rewards those who read last week's NFP correctly.
What Has Changed Since Last Week
The single most important change from the previous briefing is the June NFP. Last week called out Thursday's payrolls report as the week's defining event and the outcome was materially more dovish than the base case. Gold jumped above $4,100 per ounce on Thursday, rebounding from an eight-month low, as markets scaled back Fed rate hike expectations. The economy added just 57,000 jobs in June, the fewest in four months and well below the 110,000 forecast, with leisure and hospitality shedding 61,000 jobs despite a World Cup tourism boost. The unemployment rate unexpectedly fell to 4.2% as workers left the labour force, while wage growth edged up to 3.5% year-over-year. The low participation aspect of the unemployment decline is important: a falling rate driven by workers leaving the force is not the sign of a healthy labour market that justifies a hike. It is the sign of a labour market that is tightening for the wrong reasons.
Gold climbed to $4,170 per ounce on Friday, touching its highest level since June 23 and registering a 2% weekly gain after four consecutive weeks of declines. That breaks the streak called out in last week's briefing and changes the short-term technical picture for precious metals meaningfully.
Fed Chair Warsh's behaviour at Sintra provided a clear read on how the central bank will communicate going forward. Warsh said inflation remains too elevated even as Fed officials have become more open-minded about AI and its implications for being deflationary. "We've all looked around, and we've seen that prices are too high," he said. He sees taming inflation as the Fed's primary objective despite growing optimism about AI-driven gains. He declined to signal July timing. Investors digested the monthly jobs report after Warsh urged Wall Street to look to data to map out the path for interest rates, rather than to the central bank for forward guidance. The practical implication: the FOMC minutes on Wednesday will be the first real look inside the June meeting deliberations, and the market will be parsing every line for any dissenters who wanted to hike immediately versus those who wanted to wait for more data.
Burnham, who returned to Westminster earlier this month after winning a parliamentary seat, is the only declared candidate to replace Starmer, and if there are no other challengers he could take office by mid-July. His policy reassurance speech on the Monday of the previous week - confirming adherence to Labour's 2024 manifesto - produced a modest GBP recovery. Burnham stated that his plans would be consistent with Labour's 2024 manifesto and that he intends to give Britain a "circuit breaker." Burnham once said the government should "get beyond this thing of being in hock to the bond markets," though he later said he was misrepresented. His choice of finance minister will be closely watched as a sign of how left-wing his government could be. The nomination window opening Wednesday is the next event risk for sterling this week.
The UAE restored its exports to over 3.9 million barrels daily, pushing total daily Hormuz flows past 10 million barrels. This surge, combined with ongoing emergency reserve releases and ad hoc Saudi sales to Asia, has created a market surplus. Oil at $68-$69 has now returned to pre-war levels, which is structurally relevant for the peace-trade thesis but also means the downside from here is now smaller than it appeared two weeks ago.
Commodity Outlook For The Week
Wti Crude Oil
Crude held steady around $69 per barrel heading into the weekend, hovering near levels last seen before the Middle East conflict erupted in late February as commercial shipping through the Strait of Hormuz continued to recover amid progress in US-Iran talks. Saudi Arabia's crude exports have rebounded to about 90% of their pre-war levels as more tankers successfully transit the key waterway. The UAE has also restored its oil exports to pre-war levels by routing tankers through the Strait of Hormuz and relying on a pipeline that bypasses the chokepoint.
The oil picture going into this week is defined by a surplus of supply relative to the pre-war baseline beginning to reassert itself, and the only remaining bullish argument sitting almost entirely in geopolitical optionality. OPEC+ is expected to approve another production quota increase for August as Gulf oil output gradually recovers following the reopening of the Strait of Hormuz. More supply, returning to a market that is already at $69 after a 43% quarterly collapse in Brent, is structurally bearish.
The counterforce this week is the funeral. Tehran has paused diplomacy with the US for the funeral, and critically, the IRGC has flagged elevated vigilance. The IRGC warned on Friday against any attempts to target Iran in the coming days, warning that "any miscalculation will be met with a decisive and more crushing response than ever before." Any single incident at the funeral - a security breach, an assassination attempt, or Israeli provocation - would be an oil-spike event within hours. That tail risk is not priced at $69.
Crude is forecast to continue trading within the range of $67.93-$71.84 on Monday's open. That range captures the analytical picture well. There is no clear case for a sustained breakout in either direction until the funeral concludes and diplomacy resumes.
Directional bias: neutral. The path of least resistance on fundamentals is mildly lower toward $65-$67 as the supply surplus becomes more visible and OPEC+ adds barrels. But the funeral period keeps an asymmetric spike risk alive through Thursday. Do not hold a confident short through the procession days. A return above $72 with the funeral still active would signal the market is pricing an incident. A sustained drift below $67 after Thursday, when Iran re-engages diplomatically, would confirm the supply story has won.
Key support: $66.00, then $63.50. Key resistance: $72.00, then $76.00, then $80.00.
XAU/USD GOLD
Gold climbed to $4,170 per ounce on Friday, touching its highest level since June 23 and reporting a 2% weekly gain after four consecutive weeks of declines, as weak US jobs data reduced expectations for a near-term Federal Reserve interest rate hike. The weekend close is around $4,175. The four-week losing streak cited in last week's briefing has been broken. That is technically meaningful.
The intelligence snapshot shows gold's 30-day Pearson correlation with the DAX sitting at +0.73. The pan-European STOXX Europe 600 finished up 1.96% in the shortened week, with lower oil prices appearing to support sentiment as they have raised hopes that the economic fallout of the Middle East conflict may be more benign than feared. If that European equity optimism holds into Monday's open, the gold-DAX correlation supports continued gold recovery.
Fed Chair Warsh said this week that inflation expectations are moderating while reaffirming the central bank's commitment to maintaining price stability. Gold drew additional support from lower oil prices and easing inflation concerns as commercial shipping through the Strait of Hormuz continued to recover. Moderating inflation expectations combined with a weaker labour market is the near-perfect scenario for gold. Lower rate-hike probability reduces the opportunity cost of holding bullion; lower energy prices reduce one of the primary inflation arguments against gold. The metal has both arguments in its favour simultaneously for the first time in three months.
The FOMC minutes on Wednesday are the key scheduled risk. If the minutes reveal that a majority of members were genuinely close to hiking at the June meeting, the September probability would recover and gold would face renewed pressure. If the minutes confirm a data-dependent, patient approach, the recent rally has room to extend toward $4,250.
Directional bias: cautiously bullish. The technical break of the four-week downtrend combined with softer rate expectations and stable Hormuz flow creates a constructive short-term setup. The $4,200 level is the immediate resistance to watch. A daily close above $4,200 opens the way toward $4,300-$4,350. A reversal back below $4,100 within the first two sessions would suggest the NFP rally is being faded and the rate channel is reasserting.
Key support: $4,100, then $4,000, then $3,950. Key resistance: $4,200, then $4,300, then $4,370.
XAG/USD SILVER
Silver rose to $62.40 per ounce on 3 July, up 2.41% on the day. Over the past month, silver's price has fallen 15.49%, though it remains 68.92% higher than a year ago. The weekly recovery from Thursday's NFP was substantial. Silver rose above $62 per ounce on Friday, reaching its highest level since June 23 and heading for a nearly 6% weekly gain, as weaker-than-expected US jobs data dampened expectations for a near-term rate hike. The CME FedWatch tool showed the probability of a rate increase falling to 50%, down from 66% before the data.
The moment NFP data was released, silver soared 4%, breaking through 61.5, in a sharp short-cover move that validates the sensitivity of this instrument to rate-hike probability shifts. The intelligence snapshot shows XAG/USD's 30-day Pearson correlation with the Nasdaq at +0.80. This is critically important for assessing whether silver's recovery can sustain. The S&P 500 rose less than 1 point on Thursday to end at 7,483.24, while the Nasdaq dropped 0.8%. Semiconductors fell for a second day in a row, weighing on the index. A Nasdaq that is still being dragged lower by semiconductor profit-taking creates a ceiling for silver's recovery, regardless of what the rate picture is doing. The +0.80 correlation means that if the Nasdaq falls another 2-3% this week, silver's rate-driven gains will be partially offset.
Watch SpaceX's entry into the Nasdaq 100 on Monday 7 July. This is a substantial index event that could produce unusual flows into or out of Nasdaq-correlated positions. If SpaceX's inclusion drives Nasdaq higher, silver gets a tailwind. If the inclusion triggers a broader index sell-off as passive funds rotate, silver faces renewed pressure from the correlation.
Silver posted a record quarterly point decline in Q2, falling 20.4% to a low of $59.47 per troy ounce - its largest quarterly percentage drop since Q1 2020. The context of a 6% weekly recovery following that decline needs to be held alongside the 15% monthly loss. This is not a trend reversal - it is a relief bounce from an oversold condition. Sustained recovery above $65 would change that read.
Directional bias: neutral, with upside bias conditional on Nasdaq stabilisation. The rate-hike repricing provides genuine support. The Nasdaq correlation is the constraint. $62-$63 is the first area where sellers from the recent downtrend are likely to emerge. Above $65, the picture turns meaningfully bullish.
Key support: $60.00, then $56.00, then $52.00. Key resistance: $63.00, then $65.00, then $68.00.
Forex Pairs Outlook For The Week
USD/JPY
The pair has been oscillating in the 160-162 zone for several weeks and the NFP print drove it toward the lower end of that range. USD/JPY turned lower for the second straight day following an intraday uptick to mid-161.00s and dropped to a more than two-week low during the European session on Friday. Spot prices recovered a few pips and traded just below the 161.00 mark, down over 0.15% on the day. Weekend rates from Yahoo Finance showed USD/JPY with a previous close of 161.0980 and a day's range of 160.47-161.52.
The Bank of Japan raised its benchmark policy rates to 1% - the highest since 1995 - in June. The Fed, by contrast, maintained the interest rate target range of 3.5% to 3.75%, leaving a gap of around 250 basis points. This differential might keep the JPY carry trade in play and hold back traders from positioning for any meaningful corrective fall.
The CFTC report dated 23 June shows JPY at -146,104 contracts, the 2nd percentile. That extreme has not materially changed since last week's briefing despite the NFP softening. The carry trade community is deeply entrenched. The yen's near-40-year low has fuelled speculation about market intervention by the Japanese government, with the crowded yen short trade still offering potential to roil markets. That is what happened almost exactly two years ago in July 2024, when the yen was at about the same level as now. The historical parallel is directly applicable. The NFP-driven dollar weakness has done some of the work that intervention would otherwise need to do, but the pair is still in the intervention-sensitive zone.
Directional bias: mildly bearish USD/JPY for the week. The 57,000 NFP print has materially weakened the September hike argument, which is the primary structural support for USD/JPY's extended bull run. The 2nd percentile JPY short means any further dollar softness from this week's FOMC minutes will produce a disproportionate JPY move relative to other pairs. The 160.00 level is the key test: if USD/JPY closes below 160.00 on any London session this week, the next meaningful support is 158.50-159.00 and the carry unwind has begun in earnest.
Key support: 160.00, then 158.50, then 157.00. Key resistance: 161.50, then 162.00, then 163.50.
GBP/JPY
GBP/JPY was trading at approximately 215.45 heading into the weekend, having recovered materially from the 210-213 zone flagged in last week's briefing. The recovery has been driven by two forces: the NFP-driven JPY strengthening was partially offset by sterling's own recovery on Burnham's policy reassurances, and the net effect has been a cross that has drifted higher rather than spiked in either direction.
The CFTC report dated 23 June still shows GBP at -105,719 contracts, the 0th percentile. That reading has not been updated since last week's briefing. The institutional short is still there. What has changed is that Burnham's manifesto-continuity pledge produced a partial short cover. The British pound outperformed its major currency peers, trading 0.25% higher to near 1.3230 against the dollar, as Burnham vowed to continue the principles of Labour's 2024 manifesto, a scenario that indicates the continuation of fiscal policy.
The critical development this week is the nomination window. Nominations for a potential leadership election will open on 9 July and close on 16 July 2026. Burnham has stated that he will stand. If no other candidate emerges by 16 July, Burnham becomes PM by acclamation without a broader vote. Part of how bond markets and sterling react to the new PM will be their choice of finance minister. Current Chancellor Rachel Reeves may represent a low-risk option by signalling continuity, but she will reportedly be replaced. The chancellor announcement is the sleeper event for GBP this month, more impactful than the nomination itself.
At 215.45, the cross is within striking distance of the 215.00-217.00 resistance zone. With JPY at the 2nd percentile and GBP at the 0th percentile, the bilateral squeeze risk has not diminished. Any combined dollar-weakening catalyst that drives both USD/JPY lower and GBP/USD higher simultaneously would compress this cross rapidly. The asymmetric risk here is that both compression forces arrive in the same session.
Directional bias: neutral with downside bias on any political surprise from the nomination process. The 215.00-215.50 zone is the point at which sellers from the overextended GBP short are likely to re-engage. A daily close above 217.00 would signal the squeeze has further to run. A return below 212.00 confirms JPY strength is overwhelming the GBP recovery.
Key support: 212.00, then 210.00, then 207.00. Key resistance: 215.50, then 217.00, then 219.50.
EUR/USD
EUR/USD trimmed part of its recent losses and settled around 1.1450, as demand for the dollar cooled. Easing concerns about the Middle East war and its consequences pushed investors away from the dollar's safety. Tepid American data weighed on the dollar additionally. Yahoo Finance rates showed EUR/USD at approximately 1.1440 heading into the weekend close.
The CFTC report dated 23 June shows EUR at +2,041 contracts, the 60th percentile. Positioning remains effectively neutral, meaning EUR/USD's direction this week comes entirely from fundamentals and the rate differential, not from positioning reversal mechanics. The NFP print has partly resolved the previous briefing's open question of whether the dollar would strengthen further on hike expectations. It has not. The US dollar index fell below 101 following the NFP data, and the 10-year Treasury yield fell back to 4.457%.
The EU's terms of trade deteriorated sharply following the Iran conflict, while relative equity returns have collapsed. J.P. Morgan sees EUR/USD hovering between 1.13 and 1.15 in the next three quarters. That medium-term frame constrains the upside. But within the week, the dollar's directional bias has shifted from the previous briefing's "mildly bearish EUR/USD" to neutral-to-cautiously-bullish. The 1.1450 level from last week's resistance is now the floor.
The FOMC minutes on Wednesday 8 July are the decisive event for EUR/USD this week. If the minutes confirm a data-dependent Fed that is genuinely uncertain about September, EUR/USD can test 1.1500-1.1550. If the minutes show strong internal hike sentiment despite the NFP, EUR/USD fades back toward 1.1380-1.1400.
Directional bias: cautiously bullish, target 1.1500-1.1550 if FOMC minutes are patient. A daily close below 1.1380 would signal the dollar is recovering faster than the NFP implied.
Key support: 1.1380, then 1.1300, then 1.1200. Key resistance: 1.1500, then 1.1550, then 1.1600.
USD/CAD
USD/CAD was trading at approximately 1.4198 heading into the weekend. The previous briefing's bullish USD/CAD call has been partially reversed by the NFP shock. Dollar weakness is the near-term headwind.
The CFTC report dated 23 June shows CAD at -146,792 contracts, the 12th percentile, with the institutional short still being actively built week-on-week. The structural case for USD/CAD upside through the CAD short has not changed. But the currency's behaviour in the short term is now dominated by the gold-CAD dynamic noted in previous briefings. Gold climbed to $4,170, posting a 2% weekly gain. A rising gold price is marginally CAD-supportive through Canada's commodity-exporter positioning. That creates a temporary counterwind to the structural bearish CAD thesis.
The IMF warned in April that the UK could see the biggest hit to growth from the Iran war of any major economy, forecasting 0.8% growth in 2026. Canada's situation is less severe given its oil-exporter status in a world of relatively normalised Hormuz flow, but the global growth caution that the IMF's broader positioning implies is a headwind for commodity-linked currencies.
The week's most important release for USD/CAD is Wednesday's ADP and more importantly the FOMC minutes on Wednesday evening. If the minutes are dovish, the dollar extends its NFP-driven weakness and USD/CAD tests 1.41-1.40. That pullback, if it materialises in the first half of the week, is the structural entry point for the longer-term USD/CAD bull case rather than its reversal. The 12th percentile CAD short positioning means institutions have not abandoned their view. They are likely to add to it again on dollar-strength prints.
Directional bias: near-term neutral, medium-term bullish. The immediate setup is a drift toward 1.41-1.40 on continued dollar softness, followed by a resumption of the structural uptrend once the FOMC minutes establish that the hike bias has not been abandoned. Do not chase USD/CAD lower aggressively this week.
Key support: 1.4100, then 1.4000, then 1.3850. Key resistance: 1.4300, then 1.4450, then 1.4600.
USD/CHF
USD/CHF was trading at approximately 0.8027 heading into the weekend. The intelligence snapshot shows USD/CHF's 30-day correlation with gold at -0.67. With gold rising on the NFP print, USD/CHF should be falling - and that is precisely what has been happening. The correlation is functioning correctly and should be used as a gut-check for any position in either instrument.
The CFTC report dated 23 June shows CHF at -41,094 contracts, the 15th percentile. Not a crowded extreme. The franc strengthening seen over recent weeks reflects genuine safe-haven demand from the Hormuz situation combined with the dollar's rate-narrative softening. UK and France agreed with Oman to ensure safety of its territorial waters, a headline that appeared in the past 14 hours and signals continued multilateral effort to secure Hormuz passage. Progress on that front reduces the safe-haven premium in the franc.
The practical dynamic for USD/CHF this week: the instrument sits at the intersection of three forces. Safe-haven demand from the Khamenei funeral period supports CHF. Dollar weakness from the NFP softening also supports CHF. But any resumption of diplomacy after the funeral concludes Thursday reduces the safe-haven component. That could produce a small bounce in USD/CHF toward 0.8100-0.8150 later in the week once the funeral risk period passes, even without a change in rate expectations.
Directional bias: mildly bearish USD/CHF to start the week, with a potential partial recovery Thursday-Friday as funeral risk clears. The 0.7950 level is the structural support that defines how far the franc can be pushed. Below 0.7950, the move is no longer just rate and safe-haven mechanics - it is becoming a structural USD bear trade of a different character.
Key support: 0.7950, then 0.7800. Key resistance: 0.8100, then 0.8200, then 0.8350.
The Week's Data Calendar
MONDAY 7 JULY - SERVICES PMI AND HORMUZ FUNERAL BACKDROP
KEY RELEASE - US ISM SERVICES PMI (June). Time: 15:00 UK. Previous: 53.3 (ISM Manufacturing had eased to 53.3 from May's four-year high but remained in expansion). The June ISM Manufacturing PMI eased to 53.3 from May's four-year high but remained firmly in expansion territory, indicating that manufacturing continues to grow despite moderating momentum, though input prices remained elevated while exports softened. The Services PMI will be watched for signs of demand destruction from higher rates and energy costs. A print below 50 would be a significant surprise, confirming the weak NFP is part of a genuine economic slowdown rather than a seasonal blip. A reading above 54 would be taken as evidence the economy remains resilient despite the soft payrolls. Relevant to USD/JPY, EUR/USD, gold.
Eurozone Services PMI (Final, June). Time: 09:00 UK. Previous: Flash reading. The final reading confirms or revises the flash reading. Any upward revision supports EUR/USD.
The main funeral procession in Tehran occurs on Monday 6 July local time (early Monday UK time). This is the highest-risk session of the week from a geopolitical perspective. Allow the first 90 minutes of London trading to establish the market's read of how the funeral day passed before adding any exposure in oil, gold, or JPY.
TUESDAY 8 JULY
KEY RELEASE - FOMC MEETING MINUTES (June 17 meeting). Time: 19:00 UK. This is one of the two most important events of the week. The minutes will reveal whether the June hold was a genuine pause or a close call in favour of an immediate hike. The Fed's dot plot showed nine members were projecting at least one hike in 2026, while eight others projected rates to remain unchanged. The minutes will show how close those camps are in their reasoning. If the nine-hike-dot members were vocally pushing for an immediate move, markets will partially rebuild September probability and the dollar will recover. If the minutes show broad consensus around a data-dependent pause, gold and EUR/USD extend their recent rallies. Relevant to all instruments.
June Services PMI is scheduled for July 6. ADP Employment Change is scheduled for July 7. Note that the US calendar labelling from some international sources places ADP on Tuesday 7 July UK equivalent. ADP employment change for June - Previous: approximately 129,000. This release has been a poor NFP predictor but a significant intraday mover for USD pairs. Last week's ADP was already below expectations before the NFP confirmed the softness.
BoJ Summary of Opinions. Overnight release (approximately 00:50 UK). The BoJ's June meeting saw rates raised to 1.0%, the highest since 1995. The Summary of Opinions will reveal how close any members were to holding rather than hiking, and whether further hikes are on the table for July. Any hint of a July hike would spike JPY and compress USD/JPY toward 158.00 violently from the 2nd percentile short. Treat any BoJ communication on Tuesday as a potential market mover for USD/JPY and GBP/JPY simultaneously.
WEDNESDAY 9 JULY - LEADERSHIP NOMINATIONS OPEN IN WESTMINSTER
Labour leadership nominations open. This is not an economic release but it is a sterling event. If no challenger to Burnham materialises, GBP could see a modest relief rally as political uncertainty is compressed. If a challenger does emerge, the leadership contest extends to September 1 and GBP faces a fresh political premium. Watch for any chancellor appointment signals alongside the nomination process. Bond markets and sterling will react partly to the choice of finance minister, with Reeves reportedly being replaced. Any name other than a fiscally centrist appointment would be a GBP negative event.
Initial Jobless Claims (US). Time: 13:30 UK. Previous: below 220,000. US jobless claims dipped by 1,000 in the last full week of June to below the 220,000 forecast, a five-week low, while continuing claims rose by 2,000 to 1,814,000, a three-month high but still low by historical standards. A significant rise this week above 240,000 would deepen the growth-concern narrative and extend dollar weakness. Relevant to gold and USD/JPY.
RBA Rate Decision (overnight Tuesday-Wednesday UK time). Markets broadly price the RBA's cash rate remaining at 4.35% through July, with expectations favouring an extended pause unless inflation or labour-market data materially surprise to the upside. The decision itself is unlikely to move instruments in this briefing directly, but any change in language around future moves would affect AUD and through the +0.75 AUD-DAX correlation, European equity sentiment.
THURSDAY 10 JULY - HORMUZ TALKS EXPECTED TO RESUME
Talks between the US and Iran are expected to resume after Khamenei's funeral concludes around Thursday. Qatar confirmed further discussions will be scheduled at the earliest possible time after the funeral. Any statement from Qatar, Iran or the White House confirming resumption of talks is an immediate oil-negative event as it confirms the peace trade is back on track. Any statement indicating Iran's new hardline posture has made talks impossible would be an oil-spike event.
FRIDAY 11 JULY
University of Michigan Consumer Sentiment (Preliminary, July). Time: 15:00 UK. Previous: reading from June. This will be the first major sentiment gauge to capture consumers' reaction to the 57,000 NFP print and any change in their inflation expectations. The inflation expectations component within this survey is watched directly by Fed officials, particularly Warsh. A significant drop in inflation expectations here would further reduce the September hike probability.
UK GDP (Monthly, May 2026). Time: 07:00 UK. Previous: 0.6% in Q1. UK GDP has been under consistent pressure from the Iran conflict's impact on energy costs and consumer confidence. The IMF is forecasting growth of just 0.8% for the UK in 2026, which would be the biggest hit to growth from the Iran war of any major economy. A weak May GDP reading would weigh on GBP/USD and GBP/JPY simultaneously.
MOST IMPORTANT EVENTS OF THE WEEK, IN ORDER: FOMC minutes Tuesday evening (rate-hike recalibration for all instruments), the Khamenei funeral and diplomatic restart Thursday (oil, gold, and JPY), and Labour nomination outcome Wednesday (GBP). The data calendar is secondary to both the geopolitical signal and the Fed communication this week.
Positioning Section
From the CFTC Commitments of Traders report dated 23 June 2026.
GBP stands at -105,719 contracts, the 0th percentile. The situation is unchanged from last week's briefing. This is the most crowded institutional short in the currency positioning dataset and it has not unwound despite Burnham's policy reassurances. The pound traded 0.25% higher following Burnham's manifesto-continuity pledge, but that move was far too small to have meaningfully reduced the institutional short. The 0th percentile reading means the contrarian squeeze argument is at its theoretical maximum. The catalyst needed for a genuine short cover is not a reassurance speech - it is a chancellor appointment that definitively rules out fiscal loosening. Watch for that announcement in the week ahead.
JPY stands at -146,104 contracts, the 2nd percentile. The NFP-driven dollar weakness has done some of the work a yen squeeze might otherwise require, pushing USD/JPY from near 161.70 toward 160.50-161.00. But the absolute size of the positioning has not been reported as having changed since the 23 June data. The risk of an intervention or a BoJ hawkish surprise sits on top of a positioning extreme that is barely off its historic lows. The near-40-year yen low has fuelled speculation about Japanese government intervention. That is what happened almost exactly two years ago in July 2024 at about the same price level. A soft US inflation print caused the dollar to weaken, and the Japanese government intervened. The yen gained nearly 3% in a single day and almost 9% over four weeks. The July 2024 historical parallel deserves careful study this week.
CAD stands at -146,792 contracts, the 12th percentile. Institutions continue adding to the CAD short. The structural argument for USD/CAD upside remains intact, but the NFP shock and the gold recovery create short-term headwinds. The institutional build-short in CAD implies they are positioned for a dollar recovery that the NFP temporarily delayed, not abandoned.
EUR stands at +2,041 contracts, the 60th percentile. Neutral. EUR/USD this week is a fundamentals-driven trade, not a positioning reversal story.
CHF stands at -41,094 contracts, the 15th percentile. Modest contrarian long-CHF case through positioning mechanics, but not at an actionable extreme. The safe-haven demand during the funeral period is a more immediate driver than the positioning signal.
The correlation observation worth flagging: the intelligence snapshot shows AUD/USD's 30-day Pearson correlation with gold at +0.70. Gold has just posted its first weekly gain in five weeks. If that recovery sustains, AUD/USD at 0.6943 heading into the week has a correlation-driven tailwind that may be larger than most traders are watching for. It is not one of the pairs in this briefing, but the AUD-gold relationship is worth tracking as a secondary confirmation signal for gold's directional bias.
Institutional Pressure Watchlist
1. USD/JPY - CARRY TRADE AT MAXIMUM VULNERABILITY. The BoJ at 1.0% and the Fed at 3.50-3.75% leaves a 250bp differential that has sustained the carry trade. But the 2nd percentile JPY short combined with a 57,000 NFP print reducing September hike probability to 50% creates a situation where the differential is no longer widening - it may be narrowing. USD/JPY climbed 0.24% to 161.43 in overnight Asian trade last week, bringing the pair closer to the intervention-sensitive 162-163 area that has markets on edge. The pair has since retreated. Any BoJ hawkish signal from Tuesday's Summary of Opinions, combined with continued dollar weakness from FOMC minutes, would compress this pair toward 158-159 with considerable velocity given the 2nd percentile short.
2. GOLD (XAU/USD) - FIVE-WEEK LOSING STREAK BROKEN, POSITIONING TRANSITION IN PROGRESS. The precious metal has broken its losing streak at precisely the moment when the rate-hike probability has halved from 66% to 50% and the DAX correlation (+0.73) has European equities in a constructive posture. Central banks also contributed to demand, adding a net 41 metric tons of gold to reserves in May, per World Gold Council data. The institutional bid is present in the physical market alongside the speculative relief. If FOMC minutes confirm a patient Fed, gold could sustain a move toward $4,250-$4,300 this week with reasonable macro support. The risk is that the minutes surprise hawkish.
3. GBP/JPY - BILATERAL SQUEEZE POTENTIAL REMAINS EXTREME. Both the GBP 0th percentile and the JPY 2nd percentile positioning extremes are live. The pair has moved from the 210-211 danger zone to 215.45, reducing the immediate squeeze risk slightly - but the underlying positioning has not changed. Wednesday's nomination outcome for Burnham could act as the GBP catalyst while the BoJ summary of opinions Tuesday acts as the JPY catalyst. If both arrive in the same 24-hour window, the combined effect on GBP/JPY could be 200-300 pips.
4. WTI CRUDE OIL - FUNERAL WEEK BINARY. Supply fundamentals point to $65-$67 as the path of least structural resistance. OPEC+ is expected to approve another production quota increase for August. But the Khamenei funeral running through Thursday creates a period of elevated geopolitical risk where a single incident could move oil $5-$8 in minutes. The two-sided nature of this instrument this week is the highest in the entire briefing. Position sizing should reflect that.
5. EUR/USD - CLEAN MOMENTUM SETUP IF FOMC MINUTES DELIVER. Neutral positioning, a broken dollar downtrend from the NFP, and a directional catalyst on Tuesday evening. EUR/USD is the clearest expression of the "weaker dollar on reduced hike expectations" trade this week because it carries no extreme positioning risk in either direction. A clean daily close above 1.1500 following dovish FOMC minutes would establish EUR/USD as the primary USD-weakness vehicle for the rest of July.
Key Levels For The Week
Wti Crude Oil
Support: $66.00, $63.50, $60.00. Resistance: $72.00, $76.00, $80.00.
GOLD (XAU/USD)
Support: $4,100, $4,000, $3,950. Resistance: $4,200, $4,300, $4,370.
SILVER (XAG/USD)
Support: $60.00, $56.00, $52.00. Resistance: $63.00, $65.00, $68.00.
USD/JPY
Support: 160.00, 158.50, 157.00. Resistance: 161.50, 162.00, 163.50.
GBP/JPY
Support: 212.00, 210.00, 207.00. Resistance: 215.50, 217.00, 219.50.
EUR/USD
Support: 1.1380, 1.1300, 1.1200. Resistance: 1.1500, 1.1550, 1.1600.
USD/CAD
Support: 1.4100, 1.4000, 1.3850. Resistance: 1.4300, 1.4450, 1.4600.
USD/CHF
Support: 0.7950, 0.7800, 0.7650. Resistance: 0.8100, 0.8200, 0.8350.
The Week's Risk Radar
RISK ONE: KHAMENEI FUNERAL DISRUPTED BY VIOLENCE. The Islamic Republic is on watch for any potential attacks that may target the funeral ceremony, where millions of Iranians and several foreign dignitaries are expected to take part. As crowds gather, any attack could kill thousands, while senior Iranian officials appearing in public face the added risk of assassination. Israel's Defence Minister was reported to have said Iran's new Supreme Leader Mojtaba Khamenei was "marked for death," which adds a specific named threat dimension. An attack of any scale during the funeral would be an immediate oil spike of $8-$12, a gold surge above $4,350, and a yen short cover that sends USD/JPY through 160.00 violently. The market is not pricing this tail risk at current oil levels.
RISK TWO: MOJTABA KHAMENEI MAKES A PUBLIC STATEMENT HARDENING IRAN'S HORMUZ POSITION. Khamenei's 56-year-old son Mojtaba, who was wounded in the attack that killed his father and was appointed new supreme leader in March, has not been seen in public or issued an audio statement since his appointment. He is not expected to attend his father's funeral and sustained severe injuries. The full extent of his injuries - and how they are affecting his ability to fulfil his duties - remains unknown. A first public statement from the new Supreme Leader would be a historic event. If that statement endorses Iran's right to control Hormuz and rejects the MoU framework, diplomatic progress collapses. This is the specific scenario that would push oil back above $80 within a trading session, because it would remove the diplomatic optionality that oil is currently pricing.
RISK THREE: FOMC MINUTES REVEAL MAJORITY WERE CLOSE TO HIKING IN JUNE. Nine members were projecting at least one hike in 2026. If the minutes reveal that several of those nine were explicitly arguing for an immediate hike at the June meeting and were only persuaded by the geopolitical uncertainty, the minutes would be read as confirming that September is a live meeting regardless of the 57,000 NFP. Markets have moved from 66% to 50% September hike probability. A hawkish minutes read would push that back toward 60-65%, reversing the week's gold and EUR/USD rally overnight. This is the most under-discussed event risk in the data calendar.
RISK FOUR: UK CHANCELLOR APPOINTMENT IS FISCALLY LEFTWARD. Part of how bond markets and sterling react to the new PM will be the choice of finance minister. Reeves will reportedly be replaced. BBH's global head of FX strategy noted that a Burnham-led government will likely lead to more spending and borrowing, adding that "political uncertainty will continue to dominate the price action in GBP and gilts, with the bias skewed to the downside given worsening UK fiscal credibility." A chancellor appointment to the left of Reeves - any candidate with explicit borrowing-expansion language - would hit GBP/USD from 1.3350 down toward 1.3100 rapidly, and the 0th percentile GBP short positioning means institutions are ready to add aggressively.
RISK FIVE: SPACEX NASDAQ 100 INCLUSION TRIGGERS INDEX SELL-OFF RATHER THAN RALLY. SpaceX is set to join the Nasdaq 100 on Monday 7 July. This is a major passive-fund rebalancing event. If SpaceX's inclusion triggers selling pressure in other Nasdaq components as passive funds adjust weights, the semiconductor sell-off that ran through the prior week could deepen. The VanEck Semiconductor ETF dropped 4.5% last week, led by Teradyne and KLA. Silver's +0.80 Nasdaq correlation means a Nasdaq 100 selloff driven by index rebalancing, rather than macro fundamentals, would produce downward pressure on silver that is technically decoupled from the rate-hike argument supporting the recent recovery. This is the specific scenario that traps traders who are long silver on the NFP narrative but exposed to the Nasdaq correlation.
Early Warning Signals To Watch
SIGNAL ONE: OIL GAPS ABOVE $72 AT MONDAY'S OPEN AND HOLDS FOR 90 MINUTES. If WTI opens above $72 on Monday and that level holds through the first 90 minutes of London trade, the market is pricing either a funeral incident or an immediate Iranian hardening of position. At that point, close any remaining USD/JPY longs - the safe-haven yen bid will follow oil higher. Check gold simultaneously: if gold is also above $4,250 on the same open, the dual signal confirms the safe-haven trade has overwhelmed the rate-narrative and you are in a regime shift, not a spike. Reduce all risk exposure until the signal clarifies.
SIGNAL TWO: FOMC MINUTES PRODUCE A DOLLAR RALLY ABOVE DXY 102 ON TUESDAY EVENING. The dollar index was below 101 after the NFP print. The dollar index plummeted below 101 following the data. If the FOMC minutes drive DXY back above 102 in the Tuesday evening session, the rate channel has reasserted and the NFP-driven trades are being unwound. At that point, gold breaks back below $4,100, silver drops below $60 again, and USD/JPY recovers toward 161.50. The EUR/USD close below 1.1400 on the same session would confirm the move is broad dollar-strength, not pair-specific. Reduce long gold and long EUR/USD at that combination.
SIGNAL THREE: USD/JPY CLOSES BELOW 160.00 ON THE LONDON DAILY CLOSE. This is the carry-unwind confirmation level. A London close below 160.00 on any session this week - particularly if associated with a BoJ or MoF communication, or with a broader risk-off move from the funeral - confirms the 2nd percentile squeeze has begun. Check GBP/JPY simultaneously: if GBP/JPY drops below 212.00 on the same day, both legs of the cross are firing and the combined short cover is underway. At that point, close all JPY shorts immediately. The unwind from the 2nd percentile has historically produced 300-500 pip moves within 48-72 hours once the structural level breaks.
SIGNAL FOUR: BURNHAM NAMES HIS CHANCELLOR ON WEDNESDAY. The market response to the chancellor name is the test of whether the 0th percentile GBP short is correct or overcrowded. If the name announced is Rachel Reeves or another explicitly fiscally-centrist figure, GBP/USD rallies 100-150 pips and the squeeze begins in earnest. If the name is to the left of Reeves with any history of borrowing-expansion comments, GBP/USD breaks below 1.3200 and the 0th percentile short adds to itself. The chancellor decision, not the leadership nomination, is the GBP event of the week.
How To Approach Your Trading This Week
FIRST PRINCIPLE: SEQUENCE YOUR RISK AROUND THE FUNERAL, NOT THE CALENDAR. The economic data this week - Services PMI, ADP, FOMC minutes, jobless claims - all matter. But none of them will override a funeral-related geopolitical event in oil, gold, or JPY if one occurs. The main Tehran procession on Monday and the funeral's conclusion around Thursday define the bookends of the elevated risk period. Enter Monday with smaller positions than normal, and do not deploy full-sized positions in oil or JPY until the funeral period has passed without incident. The FOMC minutes on Tuesday evening are your first major scheduled risk. Wait for that clarity before sizing up. The week has a natural structure: the first half is geopolitically dominated, the second half is data-dominated. Trade them differently.
SECOND PRINCIPLE: USE THE NFP SHIFT AS A LENS, NOT A SIGNAL. The 57,000 jobs print changed the September rate-hike probability from 66% to 50%. That is a meaningful shift, and it rightly drove gold, EUR/USD, and silver higher. But a single soft payroll in a month that saw leisure and hospitality shed 61,000 jobs from a World Cup-related seasonal distortion is not the same as a trend change in the labour market. The June payrolls miss reflected gains in professional and business services and health care being offset by a 61,000 drop in leisure and hospitality, while other sectors were flat. One month of data, distorted by a specific sector dynamic, does not confirm the Fed's hiking cycle is over. Use the NFP move to identify the levels where the NFP narrative is being tested, then let the FOMC minutes either confirm or deny the new hypothesis. Do not run maximum risk in the NFP direction before seeing whether the Fed validates it.
THIRD PRINCIPLE: KNOW WHICH CORRELATION IS DRIVING YOUR POSITION BEFORE YOU ENTER. This week contains multiple correlation-driven instruments with conflicting anchor signals. Silver is pulled between its +0.80 Nasdaq correlation and its rate-hike-driven relief bounce. USD/CHF is pulled between its -0.67 gold correlation and the potential funeral-risk safe-haven premium. GBP/JPY has two positioning extremes that can fire in the same direction simultaneously. Before entering any position this week, identify which of these correlations is the primary driver in the current session and whether the correlation anchor is confirming or breaking from the instrument's recent direction. A break from a confirmed 30-day correlation is a stronger signal than a continuation. If silver is rallying but the Nasdaq is falling, you have a correlation break that tells you something about the character of the silver move - specifically, that it is being driven by the rate narrative alone, without the Nasdaq tailwind, and is therefore more fragile than the price movement suggests.
Markets Mastered - The Week In Four Lines
The dominant theme is the collision between a geopolitical pause - Iran in mourning, talks suspended, Hormuz under fresh warning - and an economic shift that has halved Fed rate-hike expectations in a single session, producing a week where the first half is about survival and the second half is about opportunity. The FOMC minutes on Tuesday evening are the single most important scheduled event of the week, capable of either confirming the gold and EUR/USD recovery or reversing it entirely, while the Khamenei funeral procession on Monday morning operates as an unscheduled binary that could override every data point that follows. The primary trade opportunity is long gold targeting $4,200-$4,250, entered only after Monday's funeral session has passed without incident and the FOMC minutes have confirmed a patient Fed, because both conditions must be met before the trade has both the geopolitical and the monetary tailwind it requires. The key risk management principle is simple: this week's regime is defined by two sequential checkpoints, not one - if geopolitical risk clears on Monday but monetary risk does not on Tuesday, the trade does not exist, and discipline in waiting for both to resolve is the difference between capturing the opportunity and funding someone else's entry.