The euro rose against a mixed dollar on Friday, supported by profit-taking, month-end flows and lower U.S. yields as softer oil tempered Fed tightening expectations. Minneapolis Fed President Neel Kashkari said the central bank may need to raise rates as inflation remains broad-based, reiterating inflation concerns expressed by New York Fed President John Williams on Thursday. U.S. data showed the goods trade deficit widened sharply to a 14-month high in May, while consumer sentiment rebounded in June but remained weighed by cost-of-living concerns.
The European Central Bank Sintra forum kicks off Monday with panels featuring top central bankers, including the Fed Chair Kevin Warsh. UAE Foreign Minister Sheikh Abdullah bin Zayed stressed the need to protect Hormuz shipping lanes in a call with Iran’s Abbas Araqchi, as Tehran reasserted its right to control and warned Gulf states against backing the U.S. U.S. President Donald Trump threatened a 100% tariff on goods from countries imposing digital taxes on U.S. firms and said Iran foolishly fired drones at ships in Hormuz. U.S. Secretary of State Marco Rubio announced a framework agreement between Israel and Lebanon after talks in Washington.
Dollar direction was also shaped by quarter-end and monthly rebalancing, with corporate and fix demand providing support. EUR/USD rose on short-covering and stronger risk assets though a long upper wick and falling monthly RSI temper the bullish daily signals. GBP/USD edged up above 1.32, aided by lower U.S. yields and easing UK fiscal risks, though upside is capped by technical resistance. USD/JPY traded in a tight range below 162, signaling potential bull exhaustion, with upside capped by intervention risk and July yen seasonality turning supportive after next week’s Q2 Tankan. AUD/USD slipped, weighed down by lower oil, softer CNH and month-end adjustments, leaving a bearish technicals in place as it nears its 0.6858 200-DMA.
Treasury yields were down as much as 3 basis points as the curve steepened. The 2s-10s curve was up about 2 basis points to +28.2bp.
The S&P 500 eased 0.10% in a choppy market.
WTI oil fell 3.8%, nearly filling an outstanding early-March price gap below $70/bbl.
Gold rose 1.08% while copper gained 0.79%.
Heading toward the close: EUR/USD +0.16%, USD/JPY -0.04%, GBP/USD +0.08%, AUD/USD -0.20%, DXY -0.09%, EUR/JPY +0.11%, GBP/JPY -0.01%, AUD/JPY -0.26%.(Editing by Burton Frierson Robert Fullem is a Reuters market analyst. The views expressed are his own)
