Global markets experienced a boost on Monday, driven by optimism stemming from a U.S. inflation report that suggests potential policy easing in 2024. This positive sentiment was further supported by the avoidance of a U.S. government shutdown. With last week’s central bank decisions behind us, this week is relatively quiet, with only meeting minutes from select central banks and limited impactful U.S. economic data.
Market dynamics remain consistent: the U.S. dollar is supported by strong economic fundamentals and elevated bond yields, which weigh on commodities and gold.

Asia-Pacific Markets
The Australian dollar is testing lows last seen in October 2022, with further movements likely to depend on price action within this critical zone.
Meanwhile, the Japanese yen has weakened to a fresh local low against the U.S. dollar. The USD/JPY pair shows an increasing probability of its local downtrend.

European Markets
European equities have faced consistent pressure in recent weeks as investors shift toward U.S. assets and the strengthening dollar. The STOXX 600 index is on track for a 4% quarterly decline. Similarly, the euro is trading near two-year lows and is set for its weakest quarterly performance against the dollar since Q2 2022, with a 6.5% loss. Investor confidence in the eurozone economy has been dampened by uncertainty around potential U.S. tariffs on European exports, alongside political challenges in Germany and France—two key economic drivers of the region. These factors have collectively fueled concerns about the eurozone's growth outlook.

American Markets
The U.S. economy continues to exhibit strength, with robust employment, gradual inflation moderation, and healthy business activity. This resilience has propelled the S&P 500 to record highs earlier this year. Ahead of Wall Street’s opening, futures pointed to moderate gains, with S&P 500 futures up 0.3% and Nasdaq futures up 0.5%. Despite a nearly 2% decline for the S&P 500 and a 1.8% drop for the Nasdaq last week, the Nasdaq remains up 30% year-to-date.
Market expectations now include two potential rate cuts in 2024, which would bring the Federal Reserve's benchmark rate to 3.75%-4.0%. This shifting outlook has driven sharp increases in 10-year Treasury yields, further strengthening the U.S. dollar. The dollar index remains near a two-year high of 107.96, with a monthly gain of approximately 2%, underscoring its role as a dominant force in global currency markets.