Eurozone

The euro strengthened versus the dollar, yen, and pound, buoyed by renewed investor confidence in the ECB’s monetary policy. Chief Economist Philip Lane noted that the latest rate cut should help inflation return to the 2.0% target over the next 18 months, after a projected dip. Lane emphasized the need to safeguard the economy ahead of any extended pause in the dovish cycle, citing uncertainty around consumer price trends. This reassurance bolstered trust in European financial authorities and provided a lift to the euro.

United Kingdom

The pound slipped against the euro but gained ground versus the yen and dollar. Today, Finance Minister Rachel Reeves is set to unveil a new housing market spending review, which has already sparked strong gains among top homebuilders. The centerpiece is a £39 billion program to boost affordable housing—almost double current allocations. The proposal is expected to benefit companies specializing in affordable housing, with Vistry Group Plc shares rallying nearly 10.0% on the news.

Japan

The yen firmed against the dollar but lost ground to the euro and pound. Market attention is focused on the Bank of Japan, which is widely expected to keep its key interest rate at 0.50% at the upcoming meeting, with further hikes likely down the road. Bank officials have cited global trade uncertainty as a constraint on a hawkish policy pivot, due to inflationary risks. However, the recent US-China trade accord may pave the way for a new deal between Japan and the Trump administration, enabling the BoJ to take a longer view on monetary tightening to address persistent inflation.

Australia

The Australian dollar advanced versus the yen and the US dollar, but weakened against the pound and euro. Positive sentiment is underpinned by the US-China framework trade deal, which restores Geneva-like tariff conditions—Chinese tariffs at 10.0% and US tariffs at 30.0%, down sharply from previous levels of 145.0% and 125.0%, respectively. Meanwhile, Australian Bureau of Statistics (ABS) data showed a 0.3% rise in business turnover for April, driven by gains in 7 of 13 sectors. Hospitality (+3.8%) and leisure (+3.7%) led growth, while administration (–2.1%) and telecoms (–1.1%) lagged.

Oil

Oil prices are climbing, attempting to hold above $67.20 amid new details on US production levels. Bloomberg reports that the EIA projects a 0.4% decline in US output for 2025 to 13.37 million barrels per day, but this may be offset by substantial growth in Gulf of Mexico offshore production. Wood Mackenzie analysts forecast an increase of up to 300,000 barrels per day this year and another 250,000 barrels next year, pushing overall production more than 2 million barrels per day higher. This outlook is based on Chevron’s preliminary data, as the company aims to offset losses from its Venezuela exit by ramping up offshore output—which could account for up to 50.0% or 300,000 barrels per day by 2026.