### United States
The situation remains unclear following the first discussion between US and Chinese leaders since the inauguration. The US reports indicate that the talks centered on trade issues, with a tentative agreement involving rare earths being reached. However, China’s report noted concerns over US intentions to sell arms to Taiwan, with further discussions deemed necessary. Despite the Trump-Musk public split garnering attention due to the high-profile personalities involved, today’s focus shifts to the US employment data, following a series of lackluster economic reports such as ADP and weekly jobless claims. Nonetheless, the USD is gaining ground against the G10 currencies and remains mixed against emerging market currencies, with the euro’s rollback affecting central European currencies.
Equities in the Asia Pacific closed with mixed performances, notably South Korea’s Kospi climbing 1.5% and achieving a 5.3% weekly uptick, signifying stability after previous political unrest. Europe’s Stoxx 600 remains stable, striving for a fourth-day consecutive gain. US index futures indicate a 0.35%-0.50% uptick, recovering from prior losses. Bond yields softened globally, impacted by disappointing data from Germany and Japan, while the US 10-year Treasury yield hovers around 4.37%, showing a slight decrease.
Gold is maintaining a quiet trading session, moving within yesterday’s range between $3353 and $3375, having settled below $3290 the previous week. July WTI continues to trade near the upper range of Monday’s session, with prices settling near $62.50. The Dollar Index rebounds from its recent fall to 98.35, rising back to around 98.85 and now testing the pivotal 99.00 region. Attention remains on US employment data ahead of the weekend, with forecasts suggesting a slowdown in job growth, and consumer credit figures will also be reported today. A potential rise in unemployment could delay the next Fed rate cut to Q3.
### Eurozone
The ECB’s recently hawkish stance pushed the euro to nearly $1.1500 after a plunge to $1.1360. Following the US-China talks, the euro now finds bids near $1.1430. Despite disappointing German industrial figures, with industrial production falling -1.4% against expectations, Eurozone growth in Q1 exceeded initial estimates at 0.6%. The ECB’s outlook has boosted the euro slightly, yet upcoming data and geopolitical developments may further shape its trajectory.
### United Kingdom
Sterling reached a three-year high at $1.3615 yesterday but has since pulled back, holding below $1.3600. The recent UK-US trade deal, initially viewed as favorable, now subjects UK steel and aluminum to a 25% tariff due to the US’s recent trade conditions involving US Steel and Nippon Steel. This, coupled with potential US budget legislative impacts, poses challenges for the UK.
### China
The US dollar maintained strength against the offshore yuan after experiencing a low near CNH7.1615 in May. China’s setting of the dollar’s reference rate indicates possible stability, with projections of deflationary trends in consumer prices continuing. The focus lies on weak domestic demand and food price pressures, with updated CPI and PPI figures expected shortly.
### Japan
The yen experienced volatile trading within the JPY142.40-JPY144.40 range. A significant data miss in household spending has further complicated the economic outlook. GDP figures anticipated for Monday may offer additional insight. Sustained trading above JPY144.80 could signal a breakout, moving towards a more defined trend.
### Canada
The recent Canadian currency dip to CAD1.3635 coincided with troubling trade deficit data. Focus now shifts to the labor market, with reduced job growth affecting economic sentiment. The unemployment rate’s upward trajectory remains a concern, with expectations set for further potential declines. The Bank of Canada’s policies remain in focus following its recent pause.
### Australia
The Australian dollar briefly reached its seven-month high, largely retraced to about $0.6485. Resistance levels have halted upward momentum, yet the currency finds support bands between $0.6455 and $0.6475.
### Mexico
The peso recently hit an eight-month low against the US dollar, with potential support near MXN19.00 still untested. Mexico continues to leverage its low volatility and competitive interest rates in the carry trade market. Economic data, particularly CPI figures due soon, may further influence currency valuations.
