Uncertainty lingers over the first conversation between U.S. and Chinese leaders since the inauguration. While the U.S. highlighted discussions focused on trade and an agreement on rare earth elements, China expressed concerns about American arms sales to Taiwan, calling for further negotiations. The Geneva agreement seems to apply broadly to Beijing’s export controls on essential minerals and magnets. Despite no fixed schedule, future talks are anticipated. Meanwhile, attention has shifted to today’s U.S. employment data following several lackluster reports. The dollar remains stronger against G10 currencies but shows mixed performance against emerging market currencies, with euro weakness weighing on Central Europe.

Asia Pacific Markets

The dollar-yen pair has fluctuated between JPY142.40 and JPY144.40 this week, recently approaching the upper end near JPY144.20. A clear breakout may require closing above JPY144.80. Japanese household spending fell unexpectedly by 0.1%, contrary to projections for a 1.5% rise. While Q1 consumer spending did show a slight 0.2% gain, Japan’s GDP for the quarter contracted by 0.2%.
In Australia, the local dollar briefly hit a new seven-month high near $0.6540, aligning with key technical resistance. Despite closing above $0.6500 for the first time this year, momentum faded, leading to a pullback around $0.6485. Support is likely between $0.6455 and $0.6475.

European Markets

The euro rallied to nearly $1.1500 after a “hawkish cut” from the ECB, but reversed as markets digested the Trump-Xi developments. Disappointing German data—including a drop in industrial output and exports—pushed the euro down to $1.1410, with further support seen near $1.1380. Despite this, eurozone Q1 growth was revised up to 0.6%, doubling the initial estimate.
In the UK, sterling climbed to a three-year peak near $1.3615 but eased back, testing support at $1.3530. Market focus turned to potential risks from U.S. tariffs and the budget proposal, including a clause targeting nations implementing digital taxes or global minimum corporate tax rules.

American Markets

The Dollar Index has rebounded from a recent dip to 98.35, driven initially by remarks from the ECB and later by positive sentiment following the Trump-Xi exchange. It now hovers near 99.00, with a potential to shift higher if it crosses 99.40. Investors are closely watching U.S. labor data, with May job growth expected to slow to 130k from April’s 177k. The unemployment rate, steady at 4.2%, is a key focal point—any rise could impact expectations for the next Fed rate cut. Meanwhile, consumer credit slowed in Q1, reflecting increased debt stress. April’s credit figures are also due but are unlikely to sway markets significantly.