Tensions between Israel and Iran remain elevated, yet global markets appear largely unaffected. While oil prices are high, disruptions in the Strait of Hormuz are attributed more to private insurance decisions than direct military actions. President Trump, after dismissing the G7's proposed statement for restraint, left the summit prematurely and returned to Washington. Meanwhile, the US and UK concluded a trade agreement, though important details such as UK steel tariffs remain unresolved. Discussions with Japan failed to produce a breakthrough. The dollar is showing mixed performance against G10 currencies, leaning firmer against emerging market counterparts.

Asia Pacific Markets

In Asia, both the Japanese yen and Australian dollar showed notable movements. The yen weakened slightly after the Bank of Japan kept its interest rate target steady at 0.50%. Governor Ueda voiced concerns over inflation expectations and the real economy, especially in the auto sector, which could be hit hard by upcoming US tariffs. Meanwhile, the BOJ announced a slower pace of bond tapering starting in April 2026. In Australia, the AUD reached its anticipated technical level of $0.6550, retracing over 60% of its previous downtrend. However, despite hitting its strongest close since November, momentum signals warn against assuming a lasting upward breakout.

European Markets

European currencies are consolidating following recent volatility. The euro, which had peaked at $1.1630 late last week, has settled into a quieter range around $1.1555. Market participants await the outcome of the upcoming FOMC meeting for further direction. Germany's ZEW survey reflected improved expectations, with the June reading climbing to 47.5, although current conditions remain weak.
In the UK, sterling is trading near three-year highs between $1.3550 and $1.3590. Investors are focused on upcoming inflation data, with expectations that price pressures—particularly in services—will show signs of easing after a sharp rise in April.

American Markets

The US dollar is maintaining a narrow range, with the Dollar Index hovering between 97.60 and 98.50 for several sessions. Analysts suggest a move beyond 98.70 could signal a potential trend shift, though the real test lies near 99.05. Market attention is centered on the FOMC meeting, with expectations of a dovish tone amid weak labor market signals—jobless claims and continuing claims are at multi-month highs. Today's economic releases include May retail sales and industrial production, both expected to show soft readings. Prices for imports and exports appear to have declined, adding to the cautious outlook for US economic momentum.