The eurozone economy is recovering, with 0.6% growth in Q1 2025 and inflation at the ECB’s 2% target, following the ECB’s eighth consecutive rate cut, lowering the deposit rate to 2%. ECB President Christine Lagarde indicated the easing cycle may be nearing its end, while officials like François Villeroy de Galhau see policy as “normalized” but flexible, though Robert Holzmann expects steady rates through summer and Boris Vujcic awaits clearer economic and US tariff data by September. Amid global trade uncertainties, ECB members like Isabel Schnabel and Yannis Stournaras see a chance to boost the euro’s international role as a safe-haven asset, with upcoming speeches from Lagarde, Lane, and Cipollone expected to clarify ECB policy direction.

The yen hit a two-week low as improved risk appetite reduced demand for safe-haven assets, while Japanese stocks rose, with the Nikkei up 0.4% and Topix up 0.2%, driven by tech gains from companies like Advantest (+3.2%), Lasertec (+3.4%), and Tokyo Electron (+2.6%), fueled by optimism over US-China trade talks. Inflation in Japan eased, with producer prices up 3.2% in May, but BOJ Governor Ueda maintained a hawkish stance, ready to raise rates if inflation nears 2%. Meanwhile, a selloff in Japanese government bonds, coupled with Japan’s 250% debt-to-GDP ratio, raises concerns for banks and insurers facing potential losses and credit rating risks.

The Australian stock market rose on Wednesday, with the ASX 200 up 0.3% to a record high, buoyed by optimism over US-China trade talks despite weaker local currencies. Over 60% of stocks in both indices traded above their 200-day moving averages, reflecting strong market breadth. Weak Australian economic data, including 0.2% Q1 growth and declining consumer and business activity, has fueled concerns that the Reserve Bank of Australia may need to cut rates soon.