The dollar index (DXY00) rose by 0.42% on safe-haven demand following Iran’s announcement that it halted ceasefire talks with the US, increasing the likelihood of US military action against Iran. This news spurred crude oil prices to increase by over 7%, contributing to a 7 basis point rise in the 10-year Treasury note yield.
The May US manufacturing PMI increased by 1.3 points to 54.0, exceeding expectations of a 0.3 point rise. In contrast, S&P’s final-May manufacturing PMI was adjusted down to 55.1 from a preliminary report of 55.3. Additionally, the May ISM prices-paid index decreased by 2.5 points to 82.1, below the expected rise.
In currency markets, the EUR/USD fell by 0.4% due to dollar strength, while the USD/JPY increased by 0.27%. The odds of a 25 basis point rate hike at the European Central Bank’s meeting on June 11 rose to 97%, and the Bank of Japan is also expected to consider a 25 basis point hike at its next meeting on June 16, with a 78% chance being projected.
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