The U.S. dollar index (DXY) rose by 0.34% on Tuesday, driven by concerns over a potential breakdown of the U.S.-Iran ceasefire and a 4% surge in crude oil prices that raised inflation expectations. The April Consumer Price Index (CPI) increased by 3.8% year-over-year, outpacing forecasts of 3.7%, marking the fastest growth in nearly three years. Core CPI also rose by 2.8%, above the expected 2.7%.
In the Eurozone, the euro fell by 0.34% as a stronger dollar and increased crude oil prices posed challenges to the economy. The German ZEW economic sentiment indicator unexpectedly improved, rising 7 points to -10.2, contrary to expectations of a decline. Market anticipation for a 25 basis point rate hike by the European Central Bank (ECB) stands at 87% ahead of its meeting on June 11.
In Japan, the yen weakened by 0.24% amid disappointing household spending data—a 2.9% decline year-over-year against a forecast of 1.3%. The leading index for March rose to 114.5, the highest in nearly four years. The likelihood of a 25 basis point hike by the Bank of Japan is forecast at 75% ahead of their June 16 meeting.
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