The US dollar is showing strength across G10 currencies, with the British pound experiencing the sharpest decline after weak employment figures from the UK. In late European trading, sterling dropped by roughly 0.5%. While the greenback holds a mixed position against emerging market currencies, both the Mexican peso and Brazilian real recently reached their highest levels of the year. With a quiet US economic calendar today, attention is shifting to the upcoming CPI release and US-China trade discussions in London. Although US tariffs have been a central topic, current talks appear focused on export regulations, particularly concerning chips and rare earth materials.

Asia Pacific Markets

In the Asia-Pacific region, the Japanese yen weakened slightly as the dollar breached a key resistance level around JPY145.30 before retreating. Machine tool orders in Japan slowed on a monthly basis, with foreign demand holding up better than domestic.
Meanwhile, the Australian dollar hovered near the upper limit of its recent trading band, approaching $0.6540. Despite confidence data from local banks having minimal market impact, the Aussie continues to trade firmly. It recently achieved its highest close since last November, staying within a tight and familiar range during today’s session, indicating a stable outlook despite the lack of strong directional catalysts.

European Markets

In Europe, the euro maintained its position within a tight range set last Friday, unable to break past resistance levels despite recovering slightly in US trading hours. Market sentiment remains cautious ahead of the US CPI data and ongoing trade talks with China, both of which could support further dollar strength.
The British pound, meanwhile, faced renewed pressure after underwhelming labor market data. Wage growth slowed, unemployment climbed to a near three-year high, and jobless claims rose. These figures have increased speculation about a potential interest rate cut by the Bank of England in August, although no changes are expected at next week’s meeting.

American Markets

The Dollar Index remains near the lower end of its 2024 range, briefly testing resistance close to 99.40. A break above the 20-day moving average at 99.60 could signal a stronger technical outlook, something not seen since mid-May. Market participants are in a holding pattern ahead of the US CPI release and next week's FOMC meeting, with officials currently observing a media blackout. This week’s Treasury auctions begin with three-year notes and continue with 10- and 30-year bonds. Rising US yields have sparked concerns about fiscal sustainability, but recent rate increases are more closely tied to changing expectations for Federal Reserve policy than to the national debt level itself.