The US dollar continued to strengthen as investors reacted positively to the outcome of the Trump-Xi summit and reassessed expectations for Federal Reserve policy. Treasury yields advanced sharply, with the two-year yield posting a fourth straight weekly increase, while markets raised forecasts for the year-end Fed funds rate. Attention is now shifting back toward Iran after the conclusion of the US-China meeting, with the fragile ceasefire in the Middle East helping push crude oil prices to their highest levels in more than a week. Rising yields pressured global equities, while risk appetite weakened across major regions.

Asia Pacific Markets

Trading across Asia-Pacific reflected growing caution as investors focused on higher oil prices and tightening financial conditions. The Japanese yen weakened to its lowest level since the suspected April intervention despite expectations that the Bank of Japan could raise rates next month. In China, the offshore yuan lost ground after the dollar climbed to a one-week high, while the PBOC slightly adjusted the daily fixing higher. India’s rupee dropped to fresh lows amid widening trade deficits and surging energy costs. Regional stock markets also suffered, with Japan’s Nikkei and China’s CSI 300 falling sharply, while South Korea’s Kospi recorded the steepest decline in the region.

European Markets

European markets remained under heavy pressure as political uncertainty in the UK and the stronger dollar continued to weigh on sentiment. Sterling extended its decline for a fourth consecutive session after renewed political maneuvering against Prime Minister Starmer intensified concerns around domestic stability. The currency fell below key technical levels and reached its weakest point in Europe near $1.3325. The euro also remained under pressure after failing to recover above resistance levels, extending its losing streak to five sessions. European equities sold off broadly, while bond yields across the region climbed significantly, with UK gilt yields leading the move higher.

American Markets

North American markets reflected a sharp shift toward defensive positioning. The dollar strengthened further against the Canadian dollar and Mexican peso as investors favored safe-haven assets and reacted to higher Treasury yields. US stock index futures turned sharply lower, with technology shares leading declines ahead of key economic releases. Gold and silver faced aggressive liquidation, reversing recent gains as higher yields reduced demand for precious metals. Oil prices moved sharply higher, with WTI crude breaking above recent trading ranges to reach its strongest level since early May. Investors are now closely watching US industrial production data and manufacturing surveys for additional signals on economic momentum.