The euro gained momentum as US-China trade talks in London continued, focusing on rare-earth minerals and tech exports, while investors awaited speeches from ECB officials, including Francois Villeroy de Galhau, Robert Holzmann, and Olli Rehn, on monetary policy and trade uncertainties. The ECB’s recent 25-basis-point rate cut and lowered inflation forecasts signal easing price pressures, though hints of a nearing end to rate cuts bolstered the euro, despite money markets expecting one more cut by year-end. European bond yields dipped, with Germany’s 10-year Bund at 2.51%, and stocks remained flat, though chipmaker Alphawave soared 20% on Qualcomm’s $2.4 billion acquisition, and Spectris jumped 60% amid takeover talks. Persistent euro selling by central banks and sovereign funds, as noted by Bank of America, tempers gains, but a shift toward de-dollarization could strengthen the euro, while upcoming UK labor data and euro-area sentiment indicators, expected to improve slightly to -5.5, highlight ongoing economic concerns.

Japan’s Q1 GDP was revised to flat growth, better than the initially reported 0.2% contraction but slower than Q4 2024’s 0.6% expansion, boosting the Nikkei 225 by 0.92% to 38,088 and the Topix by 0.58% to 2,785, led by tech stocks. The 10-year JGB yield rose above 1.47% as BOJ Governor Kazuo Ueda signaled potential rate hikes and continued bond purchase tapering, with speculation of a slower tapering pace at next week’s meeting possibly pushing short-term yields higher. Positive US-China trade developments, including China’s approval of rare earth exports and Boeing’s resumed jet deliveries, further lifted investor sentiment as trade talks in London continued.

The Australian dollar extended Monday’s 0.3% gain, trading near 0.6520, up 2.28% over the past month and 5.32% year-to-date, with momentum suggesting a push past resistance at 0.6550 toward last November’s high of 0.6688, supported by a floor at 0.6479. Optimism from ongoing US-China trade talks in London, led by U.S. Treasury Secretary Scott Bessent and China’s Vice Premier He Lifeng, has boosted risk appetite, though China’s persistent deflation, with consumer prices falling for a fourth month and producer prices dropping sharply, raises concerns for Australia’s economy. Australia’s 10-year ACGB yield climbed above 4.3%, reflecting improved market sentiment, but RBA Assistant Governor Sarah Hunter warned that U.S. tariffs could hamper growth, potentially necessitating further policy support, with a 75-basis-point rate cut priced in by year-end and an 82% chance of a 25-basis-point cut in July.