Global risk sentiment into Monday is shaped by three converging forces: the ECB's decision on 23 July to hold all three key rates unchanged — deposit facility at 2.25%, main refinancing at 2.40%, marginal lending at 2.65% — following a June hike, the FOMC meeting expected around 29 July where a hold is the base case but futures are pricing roughly a one-in-three probability of a hike, and persistent geopolitical tension in the Middle East that has kept energy prices above pre-conflict baselines. US Treasuries sold off on Friday with the 2-year yield rising 6bp to 4.37% and the 10-year up 4bp to 4.71%, signalling that rate-cut hopes remain firmly off the table and that the inflation-vigilance narrative is intact across major central banks. The VIX closed at 18.58, easing slightly, while the DXY held near 101.47, providing a modestly firm US dollar backdrop heading into the new week.
For Asia-Pacific markets opening Monday, the Friday session delivered a distinctly cautious signal: the Nikkei 225 fell 2.73% with its VIX elevated at 32.88 despite a 5.57% decline, the KOSPI dropped a sharp 5.72%, the SSE shed 1.61%, and the ASX 200 closed down 0.75% with its own volatility gauge rising 6.86% to 11.69 — the divergence suggesting locally building unease rather than a global flush. A weakening yen with USD/JPY at 163.83, renewed tariff and trade policy uncertainty, AstraZeneca's reported 7% YoY decline in China Q2 revenues due to Volume-Based Procurement policies, and softer commodity prices — Brent crude down 3.88% to $96.78/bbl and iron ore barely flat at $98.42/t — collectively weigh on Australian resource and export-exposed names. RBA Governor Bullock is scheduled to speak at 23:05 ET, which will be a key domestic catalyst for AUD direction and rate expectations early in the week.