Global capital markets continue to react to the recent 90-day de-escalation period between the US and China. Following volatile activity the day before, markets are showing signs of stabilization today. In the US, attention is turning to budget discussions and the release of the May Consumer Price Index, which is projected to remain stable. The dollar has weakened slightly against most major currencies, excluding the Canadian dollar. While there was a notable surge in the dollar previously, its recent decline has been mild. Among emerging markets, the dollar’s performance is mixed, with most Asian currencies under pressure—except for the yuan—and mixed results in central Europe and Mexico.

Asia Pacific Markets

In the Asia-Pacific region, currency and market movements were varied. The Japanese yen strengthened slightly after the US dollar reached JPY148.65 but then fell to JPY147.65, approaching JPY148 again in European morning trading. The next technical resistance lies around JPY149.40–70. The market awaits Japan’s Q1 GDP report, expected to show a small contraction.
Meanwhile, the Australian dollar saw a sharp drop after being rejected near $0.6460. Although it briefly dipped below $0.6360, there was no follow-up selling, and it rebounded toward $0.6420. Still, short-term indicators show weakening momentum, and traders now expect the Reserve Bank of Australia to cut rates by 25 basis points at its upcoming meeting.

European Markets

The euro has pulled back after climbing since late March, losing nearly 61.8% of that advance. Despite reaching a recent high of $1.1125, it has entered a consolidation phase. Probabilities of a European Central Bank rate cut in June have slightly decreased to 85%. 
In the UK, the pound was sold off to near $1.3140 but has since bounced back to around $1.3220. Economic data showed a slight decrease in wage growth and a modest uptick in unemployment. Payroll figures also continued to fall, reinforcing a cautious outlook for the British economy.

American Markets

The US dollar index is consolidating near the higher end of its recent range after a significant move upward. It briefly approached the 102.00 level, with key technical targets between 102.10 and 103.00. Market expectations are centered around today’s CPI report, with forecasts pointing to a 0.3% monthly increase in both headline and core figures. This would reflect a notable decline in annual inflation compared to earlier periods. The Federal Reserve is now anticipated to delay any rate hikes until September. Additionally, a court case is being heard today challenging the presidential authority to impose tariffs under the 1970 International Emergency Economic Powers Act.