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The week in Global Markets
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The yen fell past 162 per dollar to its weakest level since 1986, then moved from intervention speculation toward explicit tail-risk scenarios and suspected official action. Rising hedging costs and the prospect of a move toward 200 made the currency a wider funding-market risk.
The week opened with markets pricing a near-term hike, but softer labor signals, policy comments, and June's 57,000-job gain pushed traders toward fewer hikes and possible cuts. Treasuries and gold rallied as the repricing spread across assets, though equities stayed volatile.
Eurozone inflation fell below forecasts, weakening the case for another hike, while officials kept flexibility and warned against assuming a rapid policy shift. The ECB's data-dependent stance carried into its planned engagement with fiscal policymakers.
Dollar strength erased emerging-market currency gains and hit the won and real as outflows and carry unwinds intensified. Traders then began substituting euro and Australian-dollar funding for yen and dollar exposure, fragmenting the carry-trade structure.
Equities repeatedly held up despite shifting rate expectations, with the S&P 500 closing its best quarter since 2020 and European stocks extending a four-week record run. Chip strength and resilient growth kept risk appetite firmer than bonds, gold, and oil.
Day’s Recap