Currency markets remained unusually calm, with the US dollar trading in tight ranges against most major counterparts. The euro fluctuated within a narrow band near recent highs, while the yen stayed confined to a limited range above JPY162. Market activity was subdued as investors awaited fresh US economic data and comments from Federal Reserve officials before the blackout period ahead of the next FOMC meeting. Meanwhile, the eurozone posted its first monthly trade deficit since April 2023, and sterling struggled to extend recent gains despite the UK economy returning to modest growth in May. Expectations for US retail sales remained a key focus for traders.
Asia Pacific Markets
Activity across Asia-Pacific markets was mixed. Japan’s weekly portfolio flow data showed domestic investors purchased more than JPY1 trillion of foreign bonds during the week through July 10, marking the largest acquisition since early May. They also bought foreign equities for a fourth consecutive week. In currency trading, the yen remained largely range-bound, while the offshore yuan advanced to its strongest level since mid-June as the broader US dollar softened. The People’s Bank of China made only a minimal adjustment to its daily fixing. The Australian dollar hovered around $0.70 after reaching its highest level since late June, supported by improving technical momentum.
European Markets
European developments centered on trade and growth data. The eurozone’s seasonally adjusted trade balance slipped into a deficit of roughly EUR5 billion in May, ending more than three years without a monthly shortfall. In the United Kingdom, economic output expanded by 0.1% in May following a contraction in April, helped primarily by stronger services activity. Manufacturing output also edged higher, though construction remained weak and industrial production declined. Despite the slightly stronger GDP reading and investor speculation surrounding a possible future change at the Treasury, sterling was unable to build on its recent rally. European equities were weaker, with the Stoxx 600 falling after several sessions of gains.
American Markets
US financial markets continued to reflect easing pressure on interest rates. The two-year Treasury yield recorded its largest two-day decline since last August, while the 10-year yield fell for a second consecutive session. Equity benchmarks finished higher, with the S&P 500 moving closer to its early-June record and the Nasdaq posting its strongest close of the week. Attention shifted toward June retail sales, where growth was expected to moderate from May’s strong pace, although spending excluding autos and gasoline was projected to remain relatively firm. In commodities, gold traded below recent highs, silver remained under pressure, and August WTI crude oil held near $79.50 as geopolitical tensions continued to support prices.