On Friday, the dollar index (DXY) fell by 0.19%, pressured by a rally in the S&P 500 and a stronger Chinese yuan, which reached a 3-year high. Furthermore, the University of Michigan’s May consumer sentiment index dropped to a record low of 48.2, below expectations of 49.5. The April nonfarm payroll report showed job growth with an increase of 115,000 jobs, exceeding the anticipated 65,000, while the unemployment rate remained stable at 4.3%.
In a significant escalation, Iran seized an oil tanker in the Strait of Hormuz, citing disruptions to its oil exports. Concurrently, U.S. forces targeted Iranian military assets linked to attacks on three U.S. Navy destroyers in the area. The U.S. is currently awaiting a response from Iran regarding a proposal to reopen the Strait of Hormuz and lift the blockade on Iranian ports.
In Europe, the euro rose by 0.47% amid hawkish comments from the European Central Bank (ECB) regarding potential interest rate hikes due to inflation risks associated with the ongoing conflict involving Iran. The swaps market is pricing in a 79% chance of a 25 basis point rate increase at the ECB’s next meeting on June 11.
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