Base Metals Slip on Hormuz Optimism, Firmer Dollar — Market Talk

0811 GMT - Base metals trade lower in early European hours, with three-month aluminum futures falling 1.3% to $3,050.50 a metric ton and copper down 0.9% to $13,215.50 a ton. Aluminum has slumped 18% on the month as the reopening of the Strait of Hormuz boosted expectations that supplies from Persian Gulf producers will normalize, easing concerns over disruptions from a region that accounts for more than 10% of global output. Copper also edged lower after a firmer U.S. dollar softened investor appetite for dollar-denominated commodities. Traders are also awaiting signals from Washington on refined copper imports, with any policy changes likely to influence trade flows and market sentiment in the near term. (giulia.petroni@wsj.com)

0811 GMT - Tourist arrivals to Thailand are expected to recover in 2H with the de-escalation in Middle East tensions, CGS International economists say in a report. The recovery would offer a meaningful boost to the Thai economy through higher tourism receipts, stronger domestic consumption and better employment conditions. Rising tourist spending should also help to offset weakness in merchandise exports and manufacturing, while also supporting income growth among small and medium-size enterprises and workers in tourism-related industries. CGS International raises its forecast for 2026 tourist arrivals to Thailand to 33 million from 31.5 million previously. (amanda.lee@wsj.com)

0749 GMT - Gold prices tick higher after Fed Chair Kevin Warsh delivered a less-hawkish-than-expected message and as the market turns its focus to U.S. jobs data. Bullion rebounded Wednesday as Warsh's remarks eased concerns over immediate tightening. "Gold could find near-term support if expectations for additional rate hikes continue to soften, although persistent inflation and a resilient U.S. economy are likely to limit upside potential," analysts at MUFG say. In early trading, New York gold futures are up 0.1% to $4,088.10 a troy ounce. Traders now await the release of U.S. nonfarm payrolls data due later on Thursday. (giulia.petroni@wsj.com)

0739 GMT - Sterling's gains against the euro don't look sustainable given lingering political risks and a weak economic outlook, ING's Chris Turner says in a note. Andy Burnham is expected to succeed Prime Minister Keir Starmer on July 20. The focus will then turn to who Burnham appoints as Treasury chief and what policies are enacted. "The U.K. fiscal straitjacket very much limits room for manoeuvre, and it is hard to see any major spending plans coming through without tax rises," Turner says. The U.K. economy typically performs poorer in the second half of the year and some Bank of England policymakers might want restart interest-rate cuts, he says. The euro falls to a one-year low of 0.8554 pounds, according to LSEG. (renae.dyer@wsj.com)

0738 GMT - Indonesia's inflation is expected to trend higher in the near term, Kenanga economists say in a note. Rising food and transport costs, along with persistent rupiah weakness, are likely to keep price pressures elevated, although inflation is expected to remain within Bank Indonesia's target range of 1.5%-3.5%, they say. Kenanga maintains its 2026 Indonesia inflation forecast at 3.1%, up from 1.9% in 2025, but see risks skewed to the upside if the currency remains under pressure. Bank Indonesia is expected to maintain a defensive policy stance, with the possibility of another 25bp rate increase to support the rupiah and contain inflation, it adds. (yingxian.wong@wsj.com)

0727 GMT - Yields on U.K. government bonds, or gilts, rise, tracking U.S. Treasury yields ahead of U.S. jobs data due to be released at 1230 GMT. Investors are bracing for potentially strong jobs data that could raise the prospects of the U.S. Federal Reserve increasing interest rates in the near term, IG analysts say in a note. Ten-year gilt yields climb 2.3 basis points to last trade at 4.784%, Tradeweb data show. Ten-year U.S. Treasury yields rise 1.6 basis points to 4.491%. (miriam.mukuru@wsj.com)

0725 GMT - Sterling rises to a one-year high against the euro and two-week high against the dollar. A softer euro and the proximity of big support levels have triggered some unwinding of stale sterling short positions which bet on a weaker currency, ING's Chris Turner says in a note. "Asset managers in particular have been running some large sterling short positions." It's expensive to be short sterling with one-week rates around 3.8%, while volatility is falling, encouraging position liquidation, he says. Moreover, some might view U.K. politics as not hitting sterling until end of July when Andy Burnham is expected to become Prime Minister, he says. The euro falls to as low as 0.8554 pounds and sterling rises to as high as $1.3325. (renae.dyer@wsj.com)

0716 GMT - Eurozone government bond yields rise, tracking U.S. Treasury yields higher. The day's focus will be on U.S. employment data later in the day, as well as bond supply from Spain and France. The highly-awaited panel debate Wednesday at the European Central Bank's forum in Sintra between Federal Reserve Chairman Kevin Warsh, ECB President Christine Lagarde, Bank of England Governor Andrew Bailey and Bank of Canada Governor Tiff Macklem "didn't yield much really new insights on the short-term dynamics of monetary policy of the participants' central banks," KBC Bank analysts say in a note. The 10-year German Bund yield rises 2.2 basis points to 2.898%, according to Tradeweb. (emese.bartha@wsj.com)

0708 GMT - Bitcoin recovers after Federal Reserve Chair Kevin Warsh said inflationary risks have eased at the European Central Bank's forum in Sintra, Portugal on Wednesday. Warsh's comments prompted investors to price out chance of an interest-rate rise in July, Deutsche Bank analysts say in a note. This repricing was further supported by softer-than-expected U.S. data Wednesday, including the ADP private payrolls and ISM manufacturing report, they say. Attention now turns to the U.S. nonfarm payrolls report at 1230 GMT. Bitcoin rises 0.8% to $60,530, having reached a 21-month low of $57,775 on Wednesday, LSEG data show. (renae.dyer@wsj.com)

0652 GMT - U.S. employment data in June may be distorted by temporary hirings related to the FIFA World Cup, Barclays Private Bank and Wealth Management's Julien Lafargue says in a note. "The data may also be distorted as hiring linked to the FIFA World Cup may have temporarily boosted employment in sectors such as leisure and hospitality during the survey period," the chief market strategist says. Markets are likely to place greater weight on the June CPI report on July 14, as inflation data will offer a cleaner read on the economy, he says. Analysts in The Wall Street Journal's poll forecast the addition of 115,000 jobs in June, a slowdown from 172,000 in the previous month. (emese.bartha@wsj.com)

0631 GMT - The dollar edges lower ahead of the U.S. nonfarm payrolls report at 1230 GMT as investors look for evidence on whether the Federal Reserve should raise interest rates as markets expect. With the U.S. and Iran signing a memorandum of understanding in June to end the war, the U.S. labor market comes into more focus for foreign exchange markets, Commerzbank's Volkmar Baur says in a note. However, this data will have less importance than in the past as new Federal Reserve Chair Kevin Warsh hasn't spoken much about the labor market and recent payrolls figures seem to be somewhat more volatile than previously, he says. The DXY dollar index falls 0.1% to 101.304. (renae.dyer@wsj.com)

0620 GMT - Risk of FX intervention is higher when the yen is underperforming, which the currency has only just begun to do, says RBC Capital Markets' Abbas Keshvani in an email. "For now, JPY is not as weak against Japan's major trading partners' currencies as it was before previous rounds of intervention," the director of Asia Macro Strategy says. The yen's nominal effective exchange rate has only fallen 0.7% during the past month, Keshvani estimates. By contrast, the yen NEER dropped 1.4% in the month before May's FX intervention and declined 2.4% in the month before July 2024's FX intervention, Keshvani estimates. The dollar is 0.2% lower at 162.21 yen, according to LSEG data. (ronnie.harui@wsj.com)