Palestine recognition, Trump prolongs tariff pause

Good morning, it's Carmeli here bringing you all the latest ahead of today's key Reserve Bank of Australia policy decision.Today's must-read

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Good morning, it's Carmeli here bringing you all the latest ahead of today's key Reserve Bank of Australia policy decision. Today's must-reads: Australia will recognize a Palestinian state RBNZ to cut around a fifth of its workforce Trump extends China trade negotiations to November

What's happening now

Australia will formally recognize a Palestinian state at the United Nations summit in September, breaking with close ally the US as concern mounts over Israel's plans for a military campaign in parts of the Gaza Strip. The recognition — to be made at the 80th UN General Assembly — lends legitimacy to the cause of Palestinian statehood and would see Australia join France, the UK and Canada. Palestinians wait to collect free food from a charity kitchen in Gaza City, Gaza, on Monday, Aug. 4, 2025.  Photographer: Ahmad Salem/Bloomberg Across the ditch, New Zealand's central bank plans to cut about a fifth of its workforce in the next two months in response to the government's decision to limit its funding. The Reserve Bank is proposing a net reduction of 142 positions, or 21% of its roughly 660 staff, a spokesperson said Monday. Options traders are using currencies such as the Australian dollar and euro to express bearish US dollar views after recent disappointing American economic data. The Aussie is being supported by the Reserve Bank of Australia's "cautious and gradual" stance on easing. Lithium prices and stocks spiked on Monday after battery giant Contemporary Amperex Technology Co. Ltd. halted operations at a major mine in China. Australian miners Pilbara Minerals, Liontown Resources and Mineral Resources rallied.

What happened overnight

Here's what my colleague, market strategist Mike "Willo" Wilson says happened while we were sleeping… A report that President Donald Trump extended a pause of tariffs on Chinese goods for another 90 days came late in New York's afternoon, but wasn't enough to erase losses in US stocks. A gauge of the dollar advanced before key US inflation data later Tuesday and oil arrested a seven-day slide ahead of the Trump-Putin meeting later this week. The Aussie and kiwi edged lower ahead of the RBA interest rate decision where a cut is expected, but debate over September continues. ASX futures imply a soft opening for Australian stocks. Trump prolonged a pause of sky-high tariffs on Chinese goods for another 90 days into early November, stabilizing trade ties between the world's two largest economies. The Federal Reserve's two vice chairs, Michelle Bowman and Philip Jefferson, and Dallas Fed President Lorie Logan are under consideration to serve as chair of the central bank when the position opens next year, according to two administration officials. Michelle Bowman. Photographer: Al Drago/Bloomberg Senator Miguel Uribe Turbay, a Colombian presidential hopeful who had warned that the nation was slipping back into its violent past, died two months after being gunned down while campaigning in Bogotá. His death makes it harder for President Gustavo Petro to advance his "total peace" initiative, under which the government is negotiating with several guerrilla factions and cocaine-trafficking gangs simultaneously.

What to watch

Reserve Bank of Australia decision, 2:30 p.m. Sydney July NAB Business Confidence, 11:30 a.m. Sydney

One more thing...

On April 6, the Sunday after Donald Trump unveiled his "Liberation Day" tariffs,  Treasury Secretary Scott Bessent joined the president on a flight back to Washington from Mar-a-Lago. He wanted to talk about damage control. Just months earlier, he had told his clients that under Trump the "tariff gun will always be loaded and on the table but rarely discharged." Read this Bloomberg exclusive interview with the US Treasury Secretary. Scott Bessent.  Photographer: Bonnie Cash/UPI

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