The US dollar strengthened against most major currencies early in the session before losing momentum in Europe, though it continued to advance versus the Japanese yen. Market attention remained focused on geopolitical developments after the US-China summit, as Washington adopted a tougher tone toward Iran following reports of drone strikes on a nuclear facility in the UAE. Energy markets reacted sharply, with July WTI crude climbing to a new contract high near $104.35 per barrel. Investors also monitored the implications of possible US arms sales to Taiwan alongside announcements of troop reductions in Germany and a halt to military rotations in Poland, raising concerns among US allies.

Asia Pacific Markets

Asian markets faced renewed pressure from rising commodity prices, higher yields, and mixed economic data. Japan’s Prime Minister Sanae Takaichi backed an additional budget package aimed at helping households and businesses cope with the commodity shock, while long-term Japanese government bond yields continued climbing. The dollar advanced to almost JPY159, its strongest level since the reported Bank of Japan intervention on April 30. In China, April economic indicators disappointed, with retail sales and industrial production both slowing sharply from March levels. The Australian dollar also weakened after falling to its lowest level of the month near $0.7120 before recovering modestly.

European Markets

European currencies remained under pressure despite a temporary rebound during the European session. The euro recovered toward $1.1645 after falling below $1.1610 in Asian trading, though technical sentiment stayed weak following its largest weekly decline in two months. Sterling also attempted to stabilize after heavy losses tied to political uncertainty in the UK, where pressure on Prime Minister Starmer intensified. European equities extended recent losses, with the Stoxx 600 slipping again after last week’s sharp decline. Bond yields across the region maintained a firmer tone as investors reacted to inflation risks stemming from surging commodity prices and geopolitical tensions.

American Markets

North American markets entered the session with investors weighing stronger Treasury yields, volatile commodity prices, and ongoing dollar demand. The US currency remained supported by expectations that higher rates could persist, while options positioning around the euro and yen drew additional attention from traders. US equity futures pointed lower after broad weakness in global stocks, and Treasury yields held near multi-year highs, with the 10-year yield close to 4.60%. Gold and silver extended recent declines under pressure from rising yields and the stronger dollar. Meanwhile, US data remained relatively light, though Treasury International Capital figures continued to show strong foreign demand for American assets.