ING says the BOC faces a high bar to adopt a materially hawkish stance and no surprises are expected at tonight's meeting. Unless oil rebounds to April–May levels, inflation looks too mild to warrant a rate hike, especially given downside employment and activity risks from USMCA uncertainty. ING added that the BOC’s recent hawkish tilt and higher oil have supported the CAD short term, but USMCA-related risk premiums should rise into Q3; ING expects USD/CAD to remain above 1.40 in the coming mont

Euro-area government bond yields opened higher Wednesday, tracking U.S. Treasuries. The rise was driven mainly by higher oil prices after military strikes in the Middle East, though U.S. 10-year yields eased off eight-week highs after Tuesday's U.S. inf data undershot expectations. Analysts at a Belgian bank said the move also reflected Fed Chair KEVIN WARSH reiterating a commitment to price stability in congressional testimony. According to Tradeweb, the 10-year German Bund yield rose 3.3 bps to 3.105%.

REUTERS TANKAN: Robust semiconductor demand kept Japanese manufacturing confidence relatively upbeat in July, with the manufacturing business conditions index steady at 13. Non-manufacturing confidence fell to 25 from 32 as Middle East tensions, a weak yen and rising interest rates raised costs. Manufacturers reported a semiconductor market recovery — including memory-related demand — and rapidly expanding orders for chip applications and AI-server products; electronic component orders broadly increased. A precision machinery firm said order volumes and values are at unprecedented levels and flagged capacity constraints. Services firms said Middle East tensions show early signs of easing but the situation remains unsettled. Looking ahead, manufacturers expect sentiment to stay stable and the October manufacturing index to nudge to 14, while non-manufacturing is forecast to remain at 25 as firms assess geopolitical and supply-chain risks.