The dollar demonstrates notable strength, whereas the Canadian dollar and Norwegian krone display a bit of firmness. Stocks are mainly declining, whereas interest rates are rising, alongside oil prices. The North American market might view the US’s seeming reluctance to continue “kinetic” operations as a tactical move in discussions. This week, the US Treasury Secretary is visiting Tokyo. He has observed that the weak yen is being talked about. President Trump is set to travel to Beijing later this week. The meeting between Trump and Xi is noteworthy, and we have recommended keeping expectations in check. In the meantime, the UK Prime Minister is diligently striving to ensure a robust political future after the Labour Party faced considerable setbacks in the recent local elections. His address earlier today appears to have not met expectations. Sterling and Gilts have fallen from their positions before the speech.

Given the surprisingly weak German industrial output data and the initial consecutive rise in US nonfarm payrolls in April and May, the euro showed notable strength as the weekend approached. The session high was noted close to the end, just below 1.1790. After President Trump’s rejection of Iran’s counter-proposal, the euro saw a drop, trading at approximately $1.1745 in early trading today. It bounced back to just above $1.1780 before facing resistance in Europe. Options amounting to 2.1 billion euros are positioned at $1.1750, expiring today, alongside nearly another 1.7 billion euros set to expire tomorrow. With the US jobs data and rising oil prices, the yen held steady as the weekend drew near. It stayed just below JPY157, though only slightly, even after the $620 million options that were established at that level came to an end. The dollar fell to session lows after the jobs data, nearing JPY156.45. Today, it hit JPY157.20, achieving a three-day peak. The day’s peak seems to remain undefined, but the market might take a careful approach as it nears the JPY157.40-50 range.

Sterling and Gilts showed impressive results as the weekend approached, especially after Labour faced an electoral defeat. The sterling showed a modest advantage over the euro, and the 10-year Gilts stood out as the leading performers in Europe, finishing the week with a yield drop of about four basis points. Despite the currency recording a lower intraday high for the second consecutive session, it concluded last week at its strongest level since mid-February, approaching $1.3630, achieved late in the session. In early trading today, a cautious mood resulted in a drop in sterling, which decreased to $1.3550. However, by the early European turnover, it approached nearly 1.3615 before entering a consolidation phase. No cabinet officials have resigned, and Prime Minister Starmer earlier today promised more decisive domestic action and indicated a change in foreign policy, positioning the UK centrally within Europe to enhance the economy, defense, and energy security. During the weekend, he brought back Gordon Brown, the former Prime Minister and Chancellor of the Exchequer during Blair’s tenure, as well as Harriet Harman, the deputy Labour leader under Brown, into part-time advisory roles. Initial support is identified around 1.3580. Sterling has formed a support level in recent days around the $1.3540-50 range.

The disappointing Canadian jobs report, contrasting sharply with the performance in the US, has exerted downward pressure on the Canadian dollar, which has fallen for the third consecutive session and five out of the last six. The US dollar neared the peak of its three-week trading range, just surpassing CAD1.3700. The greenback has positioned itself above the 20-day moving average for the first time in a month. At present, it is undergoing a phase of consolidation, showing a calm but variable trend today, moving within the bounds of around CAD1.3660 and CAD1.3700. There are just over 5 billion in options set at 1.3650 and 1.3660 that are set to expire today. The Australian dollar reached $0.7280 in the middle of last week, hitting its highest point since June 2022. It consolidated for the next two sessions and effectively tested the level of 0.7200 before the weekend. Nevertheless, it established a strong position near session highs, which were reached earlier in the North American session at around $0.7250. However, in the context of early trading showing a risk-off sentiment, the Aussie fell to nearly 0.7210. It bounced back to almost $0.7250 during the early European trading session. The consolidation seems to be advantageous.