Key Takeaways
- Thailand has suspended all eastern line trains to the Cambodian border, alongside the closure of all land crossings, as escalating clashes between the two nations have led to the evacuation of over 100,000 civilians and a diplomatic downgrade.
- US Secretary of State Marco Rubio is urging Arab states to present new proposals for the future of Gaza, challenging them to offer alternatives to the controversial "Trump plan" for the war-torn territory.
- The EUR/USD currency pair concluded the week nearly 1% higher, trading at 1.1741, driven by growing optimism surrounding potential US-EU trade deals that overshadowed weaker-than-expected US durable goods orders.
Thailand-Cambodia Border Conflict Intensifies
Tensions between Thailand and Cambodia have escalated significantly, leading to the suspension of all eastern line trains to the Cambodian border and the closure of all land border crossings. The clashes, which began on July 24, 2025, have spread to six border locations, resulting in Thai civilian casualties and prompting the evacuation of over 100,000 people from affected areas.
In response to the escalating conflict, Thailand's Foreign Ministry has downgraded diplomatic relations with Cambodia. The Royal Thai Air Force has deployed F-16 fighter jets to strike Cambodian rocket positions and has reportedly destroyed Cambodian command centers. The United Nations Security Council was scheduled to hold an emergency meeting on July 25, 2025, to discuss the deadly clashes.
The conflict has severely disrupted bilateral trade, which was valued at 174.53 billion baht in 2024. Thai businesses operating in Cambodia are scrambling to revise their plans, with some cancelling events and tripling stock reserves to mitigate potential disruptions. Amid the crisis, His Majesty King Maha Vajiralongkorn Phra Vajiraklaochaoyuhua has pledged royal aid for injured civilians and soldiers, as well as financial support to rebuild damaged homes. Despite the land border closures, air travel between Thailand and Cambodia remains unaffected, with alternative flight paths available. The UK Foreign Office has issued urgent travel warnings for the region.
Rubio Calls for New Gaza Options Amidst Diplomatic Push
US Secretary of State Marco Rubio is actively pressing Arab states to develop and present new proposals for the future of Gaza, challenging them to offer viable alternatives to the existing "Trump plan." Rubio, during a Middle East trip in February 2025, criticized Arab nations for their perceived inaction in taking practical steps to assist Palestinians. He emphasized that while Arab states dislike the current Trump administration's plan, it remains the only formal proposal on the table.
The controversial Trump plan involves the transfer of the Palestinian population out of Gaza and the subsequent redevelopment of the territory under US ownership, with the aim of transforming it into a "Riviera of the Middle East." Rubio has defended this proposal as a "very generous" offer for rebuilding the war-torn enclave. Reports indicate that Egypt is leading efforts to formulate an alternative plan, which could include training a new security force for Gaza and identifying local Palestinian leaders to assume governance. A key condition reiterated by Rubio is that any future solution must ensure no role for Hamas.
EUR/USD Rises as Trade Optimism Outweighs Weak US Data
The EUR/USD currency pair ended the week on a positive note, gaining nearly 1% to trade at 1.1741 on Friday. This upward movement was primarily fueled by optimism surrounding potential trade agreements between the United States and the European Union. Reports suggest that the US and EU are close to finalizing a trade deal before the August 1 deadline, a development that has significantly boosted market sentiment. Earlier in the week, news of a US trade deal with Japan also contributed to the euro's strength against the dollar.
The euro's gains occurred despite weaker-than-expected economic data from the United States. US Durable Goods Orders for June saw a sharp 9.6% month-over-month drop, reversing previous strong figures. However, this negative data was offset by robust jobless claims figures, which supported expectations that the Federal Reserve (FED) will maintain current interest rates. The European Central Bank (ECB) also kept its rates unchanged this week, adopting a "meeting-by-meeting" approach to monetary policy. Market attention now shifts to the upcoming Federal Open Market Committee (FOMC) meeting on July 29-30, where there is a 98% probability of the Fed holding rates steady at 4.25%-4.50%.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.