Markets steady as inflation concerns ease and yen volatility returns to focus

Forex Market

Global markets traded cautiously overnight as softer-than-feared US inflation data helped calm concerns around further aggressive tightening from the Federal Reserve. The Fed’s preferred inflation gauge showed price pressures continuing to moderate, easing fears of a stronger acceleration in underlying inflation. Notes that investors remain sensitive to incoming data, with markets still divided on the timing and scale of potential rate cuts later this year. Meanwhile, AI-related investment themes continue to broaden beyond large-cap technology, with growing focus on which companies can successfully monetise artificial intelligence adoption over the medium term.

In currency markets, attention shifted back to Japan after officials warned against excessive volatility in the yen ahead of the release of intervention-related data. The comments reinforced expectations that authorities remain prepared to respond if speculative moves intensify. Notes that recent yen weakness has continued to pressure policymakers, particularly as diverging interest rate expectations between Japan and the US remain a key driver of FX markets. Broader sentiment across Asia stayed relatively stable, although investors continue to monitor geopolitical developments, inflation trends and central bank guidance for clearer direction heading into mid-year.

General Market

Wall Street

Dow Jones: +0.05% to 50,674
S&P 500: +0.58% to 7,563
Nasdaq: –0.13% to 30,181

Asia-Pacific

ASX 200: +0.85% to 8,695
Nikkei: +0.21% to 65,918
Shanghai Composite: -0.02% to 4,709

Europe

FTSE: +0.14% to 10,422
DAX: -0.03% to 25,092
CAC: +0.29% to 8,186

Headlines to Watch

United States

Core PCE → critical for Fed easing expectations
Durable goods orders → business demand and growth signal
Fed speakers → policy divergence and rate path remain market focus

Europe

German CPI → key inflation benchmark for ECB outlook
Eurozone growth concerns continue amid weak manufacturing backdrop
ECB commentary → pace of future easing increasingly debated

Asia-Pacific

Tokyo CPI + yen volatility → intervention risks remain elevated
China demand outlook → commodity-sensitive currencies remain reactive
Australia credit growth → domestic consumption and housing resilience in focus
NZ business confidence → recovery momentum still uneven

Global / Geopolitics

Middle East tensions → energy prices and inflation risk remain elevated
AI investment theme broadening beyond mega-cap tech
Bond market volatility continues to drive FX and equity positioning
Central bank policy divergence remains dominant macro driver

Currency Pair	Mid-market Rate
AUD/USD	0.7159
AUD/NZD	1.2030
AUD/JPY	113.05
AUD/CNY	4.8466
AUD/EUR	0.6147
AUD/GBP	0.5326
AUD/HKD	5.6095

Markets steady as inflation concerns ease and yen volatility returns to focus

Forex Market