On Tuesday, the dollar index (DXY) increased by 0.09% following the release of the US March trade deficit, which narrowed to $60.3 billion from $57.8 billion in February, outperforming expectations of $61.0 billion. This rise in the dollar is attributed to ongoing tensions between the US and Iran, with US Central Command reporting defensive actions against Iranian military threats in the Strait of Hormuz.
Mixed economic indicators were reported: March new home sales rose 7.4% month-over-month to 682,000, exceeding the expected 652,000, while April’s ISM services index dropped 0.4 points to 53.6, slightly missing the forecast of 53.7. Additionally, the number of job openings reported in the JOLTS fell to 6.866 million, more than the forecast decline to 6.850 million.
Crude oil prices plunged by 3%, easing inflation concerns and potentially affecting the Federal Reserve’s monetary policy stance. Market forecasts indicate a 6% probability of a 25 basis point rate cut at the June 16-17 FOMC meeting, while a 92% chance of a 25 basis point hike is anticipated by the ECB at its June 11 meeting.
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