Dhara Ranasinghe

The fortunes of the euro, trading not far off its lowest levels of the year against ​the dollar, are in the grip of a global energy shock and growing political risk in Europe.

The global bond rout took a breather on Friday after a widely anticipated U.S. inflation report met economist expectations, pushing up market rate-hike odds while also driving expectations that the Federal Reserve ​may take a wait-and-see approach.

Government borrowing costs from the United ​States to Germany and Japan are at or near multi-decade peaks on heightened worries about inflation and rising interest rates, along with nagging anxiety about ‌their debt loads.

Long-term borrowing costs from the U.S. to Germany ​and Japan hit their highest in decades on Tuesday due to ballooning government debt and geopolitics, raising borrowing costs for companies and households and complicating policy.

Currency hedging by fund managers in the United States and Canada has risen to 94% - its highest level in ​at least four years - against a backdrop of heightened geopolitical ‌uncertainty, a survey by FX and cash management solutions firm MillTech shows.

The dollar heads into the second half of 2026 on a high, thanks to bets for higher U.S. interest rates ​and an unquenchable thirst for U.S. assets from investors chasing the "American exceptionalism" that may spell more pain for other currencies.

Britain's pound and government bond prices held lower on Monday to Prime Minister ​Keir Starmer resigning, potentially paving the way ‌for rival Andy Burnham to take over as Britain's seventh leader in a decade.

Investors and business leaders are again navigating the kind of uncertainty that has dominated British politics since the Brexit vote ​a decade ago, after Prime Minister Keir Starmer resigned on Monday and threw open a leadership contest that will centre on any successor's ‌plans for the economy.

A strong rally in tech stocks has largely gone under the radar against a darkening backdrop for European equity markets ​as the energy shock triggered by the Iran war dampens economic growth.

The pound slipped slightly on Wednesday after data showed British inflation fell more than expected in April despite the U.S.-Israeli war ​on Iran and as the dollar climbed.