### United States
The on-again, off-again saga of US tariffs is surfacing once more, prompting concerns as judicial processes are still underway. More tensions arise with Treasury Secretary Bessent confirming the stall in US-Chinese talks. Despite yesterday’s decline, the US dollar has regained strength against most G10 currencies, except for the yen, which is possibly buoyed by stronger Tokyo CPI figures. As the week progresses, Japanese long-term yields have retreated, with the 30-year yield seeing its first weekly loss in five weeks. Meanwhile, the US dollar remains robust for the week against the G10, only rising vis-à-vis the Canadian dollar and Japanese yen as the month runs out. In the Asia Pacific, equity markets have mostly declined, with Australia and New Zealand being notable exceptions. Europe’s Stoxx 600 has improved by about 0.6% after facing a 0.8% drop in the prior two sessions. US index futures are seeing minor losses. In bond markets, European 10-year yields have inched up 1-2 basis points, and the 10-year US Treasury yield is nearing 4.43%, a rise of almost a basis point, yet virtually even for the week. Gold’s recent gains have faltered, and it is struggling to establish a steady position above $3300, although it’s slightly up for the month, marking its fifth consecutive month of gains. In oil, July WTI remains strong in European trading at session highs (~$61.45), a shadow of its previous close near $62.35 a week ago and a closing last month around $57.60.
### Eurozone
In the eurozone, the euro made a potential key upside reversal yesterday, having dipped to an eight-day low of $1.1210 before climbing to $1.1385, settling above Wednesday’s high. Today, it edged closer to $1.1400 but encountered selling pressures that dragged it back near $1.1320. Inflationary pressures appear to be easing within the eurozone, with France’s May CPI slowing by 0.6%, and similar declines reported in Spain and Italy. German states, however, report a somewhat stickier CPI, with national figures pending. The European Central Bank (ECB) meeting on June 5 is the week’s highlight, with a probable pause expected following a likely quarter-point cut to bring the deposit rate to 2.0%.
### United Kingdom
In the UK, sterling initially dropped, hitting the (38.2%) retracement from its ascent since the previous low of $1.3140 on May 12. From approximately $1.3415, it climbed above $1.3500 before stalling in North America, retracting to around $1.3455 today. Sterling has gained 1.0% this month, representing its fourth consecutive monthly uptrend. Swap market indicators place a year-end base rate at 3.83%, about 30 basis points higher than the previous month.
### China
The dollar momentarily surpassed the 20-day moving average against the offshore yuan yesterday, arriving for the first time since April 23. The People’s Bank of China set the dollar’s fix lower today after three consecutive sessions of increases. As China is set to release its May PMI figures tomorrow, both manufacturing and non-manufacturing sectors are expected to tick higher, but still pose doubts regarding meeting Beijing’s GDP growth target of 5%.
### Japan
The dollar initially surged to nearly JPY146.30 following trade court rulings against the Trump administration. It was later sold down to JPY144 during North American trading and further to JPY143.45 today. Japan observed a steady labor market with notable macroeconomic data – unemployment held at 2.5%, and the industrial output was marginally better than projected. Retail sales saw a rebound of 0.5% in April. Tokyo’s May CPI remained elevated at 3.4%, while core measures ticked higher.
### Canada
In Canada, US dollar trading saw neutrality as its earlier range encountered neutralizing impacts. The Canadian economy is projected to have grown by 1.7% annually, albeit slowing from the prior quarter. The Bank of Canada, meeting next week, is not likely to change rates dramatically, with cut odds reduced post-higher inflation readings last week.
### Australia
For Australia, the dollar saw bidding interest near $0.6400, peaking at $0.6460 amid a retreating US dollar. Notably, Australia’s retail sector faced disappointment, seeing a fall in retail sales and a decline in building approvals, contrasting to a gain in public sector credit. The prospect of a rate cut in July has increased marginally.
### Mexico
In Mexico, the peso halted a three-day decline, gaining approximately 0.35% against the US dollar. The greenback hovered close to the 20-day moving average, marking no decisive move above since mid-April. Looking ahead, Mexico faces its judiciary elections, with overall market expectations focusing on domestic economic data such as remittances and vehicle sales for May.
