### United States
The ongoing geopolitical tensions in the Middle East, particularly between Israel and Iran, have impacted the economic landscape. Despite these tensions, the US dollar remains relatively weak against G10 currencies, showing minor losses against the Swiss franc and Japanese yen. Emerging market currencies like the Thai baht and Philippine peso are also showing softness. In equity markets, Japanese and South Korean stocks have seen gains, while Taiwan and Singapore lagged. The Stoxx 600 in Europe is up, as are US index futures. Benchmark 10-year yields in Europe have edged higher, while the US Treasury yield has increased to 4.43%. Gold faced initial gains but corrected, and crude oil futures saw a pullback after rising. President Trump’s recent tariff measures and proposed budget could further influence financial markets, particularly the upcoming FOMC meeting.
### Eurozone
The euro remains stable, trading within recent ranges despite geopolitical tensions. Labor costs within the Eurozone have decelerated, with projections indicating continued declines in wage growth into 2025. The European Central Bank (ECB) anticipates this could support inflation targets, although there remains a risk of downward pressure on consumption. Investors remain inclined to buy the euro on declines as overall market sentiment appears bullish.
### United Kingdom
Sterling has been trading sideways, maintaining last week’s bullish sentiment despite economic contractions in April. Sterling reached new three-year highs last week, with technical resistance observed around $1.3640-$1.3700. The focus this week will be on the UK’s May Consumer Price Index, which is expected to stabilize, suggesting little immediate chance of a Bank of England rate cut. However, the odds of a cut in August have increased.
### China
The Chinese yuan has traded within a narrow range as market participants respond to geopolitical developments. New macroeconomic data showed mixed results, with modest retail sales growth and slight industrial production declines. Property values and investments continue to erode, while unemployment has marginally improved. US Treasury Secretary Bessent’s comments reflect ongoing concerns about China’s economic strategy, highlighting the magnitude of China’s economy as the primary challenge, rather than its export dependency.
### Japan
The Japanese yen’s exchange rate correlates with US yields, having fluctuated in line with the recent rise in Treasury yields. The Bank of Japan’s policy meeting will likely focus not on rate adjustments but on its balance sheet and bond purchases. BOJ Governor Ueda’s recent statements indicate restrained monetary policy changes in the interest of supporting the economy.
### Canada
The Canadian dollar has experienced a dip, driven by the US dollar falling to an eight-month low. While the loonie is pressured by prevailing technical caps, underlying market support resides around the 1.3500 level. This week’s housing starts figure shows little promise of altering this trajectory, with more pertinent data due later, such as retail sales.
### Australia
The Australian dollar saw a recovery from recent lows, with positive sentiment among investors visible as buying resumed. Resistance levels of $0.6540-$0.6550 present upcoming hurdles. The major economic focus this week will center on job growth figures, with the employment report expected to delineate stable, albeit slower, job creation.
### Mexico
The Mexican peso presents modest fluctuations around the MXN18.88 to MXN18.97 range, largely unwinding broader dollar gains. Mexico’s schedule appears sparse for significant market-moving data this week, although other Latin American economies such as Chile and Brazil await central bank announcements on interest rates.
