The euro remains strong despite global tensions, including reported missile strikes in Israel, as markets stay calm and the ECB downplays concerns about the euro’s value near 1.15. ECB officials express a cautious, balanced view on inflation and policy amid uncertainty, while attention turns to the upcoming Fed meeting, where no policy changes are expected but Powell’s comments will be closely watched. Key economic data releases include Sweden’s labor market figures and economic forecasts, Germany’s ZEW Survey for June, and speeches from ECB members Villeroy de Galhau and Centeno, which could shed light on future monetary policy.

The Japanese yen weakened toward 145 per dollar, declining for three days after the Bank of Japan kept its 0.5% interest rate and bond-buying plan unchanged, though it hinted at possible future adjustments. Despite no tariff deal between Prime Minister Ishiba and President Trump at the G7 summit, Japanese stocks rose, with the Nikkei 225 up 0.5% and tech stocks like Disco and Lasertec leading gains. The BOJ continues its cautious policy, planning gradual reductions in bond purchases through 2027, while monitoring global risks like rising oil prices and U.S. trade policies.

The Australian dollar dipped to about $0.65 as Middle East tensions, fueled by Israel’s intensified airstrikes and Trump’s call for Tehran evacuations, unsettled markets, though Iran’s interest in nuclear talks offered some hope. Australian bond yields fell to 4.24%, near six-week lows, with investors cautious ahead of a key jobs report that could impact expectations for a July rate cut, currently seen as 75% likely. The ASX 200 stayed flat at 8,549, supported by stable oil production and gains in stocks like Newmont (up 3.8%) and Block Inc. (up 3.4%). The Reserve Bank of Australia is expected to cut rates by a quarter point to 3.60% on July 8, marking its third cut this year, while also planning to disclose divided member votes.