### United States
The ongoing conflict between Israel and Iran has had a minimal impact on markets, apart from elevated oil prices. Private insurance is currently impeding traffic in the Straits of Hormuz, rather than any direct blockade threats from Tehran. During the recent G7 meeting, President Trump departed early after rejecting a draft urging both sides to show restraint. However, on the sidelines, the US and UK signed a trade agreement, although details on the steel tariff remain undisclosed. Discussions with Japan’s Prime Minister Ishiba did not yield a breakthrough in trade negotiations.
Currently, the US dollar is showing mixed movements against G10 currencies while firming up against emerging markets. US equities, after gains in the Asia-Pacific market in countries like Japan, Taiwan, South Korea, and Singapore, have posted some losses, with US index futures down by around 0.65%. Meanwhile, Japanese bond yields rose following the BOJ’s maintenance of current policies, while European yields climbed slightly. The US 10-year Treasury yield decreased by nearly two basis points to approximately 4.43%. Gold is on a downward trend following yesterday’s 1.4% drop, hitting a month’s lowest.
Oil prices continue to fluctuate within a broad range; currently, August WTI has risen slightly after an initial dip below $70 to now be near $71.35. In the currency market, the US Dollar Index has not exhibited major shifts during the past sessions, remaining within a range of 97.60-98.50. The index would need to break past 98.70—and possibly 99.05, where a 50% retracement of recent losses and the 20-day moving average meet—to indicate a potential corrective phase. The week, shortened by holidays, is poised to see significant data releases, notably surrounding May’s retail sales and industrial production figures.
### Eurozone
Last week saw the euro peak at about $1.1630, sliding down to around $1.1490 by the weekend. Currently, it is trading below $1.1600 for the first time in several days, consolidating mostly near $1.1555. The consolidative pattern may persist until the Federal Open Market Committee (FOMC) meeting outcomes unless tensions between Israel and Iran widen or new US tariff announcements emerge.
The June ZEW survey from Germany highlighted a recovery in economic expectations: after a notable drop in March, expectations have rebounded to 47.5 in June. However, the current sentiment remains bleak, showing little improvement from figures earlier this year. The euro’s movement largely reflects awaiting major policy announcements from the Federal Reserve.
### United Kingdom
The British pound has exhibited some stability, trading mainly between $1.3515 and $1.3630 over the past few sessions. With a recent close making it the second highest in three years, it remains mostly above $1.3550 and below $1.3590. Tomorrow, May’s Consumer Price Index (CPI) will be released. Following a significant rise in April due to utility prices, analysts expect a modest 0.2% increase, potentially lowering the year-over-year rate slightly.
### China
In China, the dollar continues trading in a narrow band against the yuan: roughly between CNH7.17-CNH7.20. The recent pattern marks this as the lowest in three months. China is urging restraint between Israel and Iran while taking a lead role in diplomatic engagements. In recent weeks, the People’s Bank of China has been anchoring the yuan higher amid broader speculation of a possible depreciation. China, a dominant buyer of Iranian oil, is maintaining a low-profile stance on this issue, aiming to mediate with hopes of procuring a peaceful resolution.
### Japan
The Japanese yen saw minor shifts recently, with the dollar’s session low near JPY143.65 and a subsequent recovery nearing JPY145.10. After remaining steady on its overnight target of 0.50%, the Bank of Japan’s Governor expressed concern over possible inflation. Although the BOJ has been tapering its bond purchases, it announced future reductions would be slower starting in April 2026. The market currently assigns around a 55% probability of a rate hike later this year, triggered by potential ramifications from ongoing US tariffs.
### Canada
The Canadian dollar experienced consistent gains against its US counterpart over the past three sessions, reaching a new low since last October. Canada will soon release April’s portfolio flows, following Q1’s indications of heightened foreign investment activities. Although the Canadian dollar was relatively stable against the US dollar in Q1, a gradual strengthening trend has become apparent.
### Australia
The Australian dollar has finally reached the anticipated $0.6550 mark after a prolonged slide since last September. It is currently trading in the upper range of yesterday’s progress. Unless there are significant shifts, the recent technical patterns caution against assuming this upward momentum signals a breakout, even if momentum indicators have not breached May’s highs.
### Mexico
The Mexican peso reversed some of its earlier losses spurred by risk-off sentiment due to the Israel-Iran conflict. Previously, the dollar had spiked against the peso, but recent trading sees it confined to a narrower range. The gains in peso remain appealing due to the high carry through potential consolidation phases. Meanwhile, Brazil’s early June inflation figures suggest a cautious stance from their central bank, likely maintaining its existing rate—a scenario expected to be mirrored during their upcoming meeting.
