Markets began the week with the dollar in command after stronger U.S. employment figures reshaped expectations for Federal Reserve policy. The May payrolls report reinforced the view that U.S. rates may rise rather than fall, lifting Treasury yields and pressuring non-yielding assets. Gold touched its lowest level in more than two months, while oil advanced as Israel and Iran traded strikes, adding to inflation concerns. With U.S. CPI and producer price data still ahead, investors stayed focused on whether price pressures would justify an even more hawkish Fed path.

Asia Pacific Markets

In Asia, Japanese investors made a sharp turn away from overseas equities in May, selling a net 2.72 trillion yen of foreign stocks, the largest monthly withdrawal since April 2021. Caution was driven by Middle East hostilities and concern that the technology-led rally had stretched too far. The MSCI World Index, which recently reached a record high, slipped as the strong U.S. jobs report triggered selling in AI-linked technology shares. At the same time, Japanese buyers added 2.9 trillion yen to foreign bonds, the most since May 2025, showing a move toward safer overseas assets.

European Markets

Sterling stayed close to a two-month low as the dollar drew support from U.S. rate-hike expectations and safe-haven demand linked to the Middle East conflict. The pound was near $1.334, only slightly above its May 18 trough, and remained almost 2% below its level before the U.S.-Israeli war on Iran began in late February. Higher oil prices and fears of supply-chain pressure weighed on sentiment. A Bank of England survey showing slower expected price rises also reinforced expectations that UK rate hikes may be delayed until at least September. The euro-pound rate stayed in a tight range.

American Markets

In the United States, the stronger jobs backdrop altered the interest-rate outlook. Goldman Sachs now expects the Federal Reserve to hold rates unchanged through 2026 and delay cuts until 2027, moving its previous forecasts from December 2026 and March 2027 to June and December 2027. The firm cited resilient activity and employment, while traders priced a high probability of rate hikes by year-end. Bitcoin also remained under pressure near $60,000, with analysts watching whether a decisive break could open the way toward $50,000 as selling targets shift lower.