Key Takeaways
- The US–Iran deal talk raised risk appetite, boosting equities, while oil prices fell on potential Strait of Hormuz reopening.
- US jobless claims rose to 229k, indicating possible economic strain, while continuing claims exceeded forecasts.
- China’s oil demand softens, impacting global prices, as imports decrease by 3 million barrels per day.
- AUD/USD and NZD/USD gained while USD/CNH drifts lower, reflecting broader currency trends related to market sentiment.
- Equities saw significant gains with Nasdaq up 2.54% and S&P 500 up 1.75%, driven by investors reacting to the US–Iran news.
Risk surges on US–Iran deal talk
A reported US–Iran settlement to end the war sent risk sharply higher, with equities posting their best session in two months. Oil plunged on the prospect of the Strait of Hormuz reopening and treasuries rallied hard, though a final agreement remains unconfirmed.
US president Trump said a “great settlement” had been reached, expected to be signed within days, with Iran pledged never to obtain a nuclear weapon. Tehran pushed back, saying no final conclusion had been reached. WTI fell 4.01% and Brent dropped 4.22% to ~$89.17.
Treasuries rallied strongly; 10yr yields richened 9bps and 5s30s steepened 2.1bps.
US data ran hot. Headline PPI jumped 1.1% in May (+6.5% YoY), well above the ~0.7% consensus, while core measures also beat.
Equities ripped: Nasdaq +2.54%, S&P 500 +1.75%, Dow +1.86%.
In Europe, the ECB hiked 25bp as expected, with projections showing softer growth but notably higher inflation. Lagarde offered no forward guidance, stressing data dependence. In the UK, PM Starmer named Dan Jarvis defence secretary after John Healey’s abrupt resignation.
In Asia, stocks mostly fell earlier on US–Iran tensions and hot US inflation. Beijing’s regulator summoned five major e-commerce platforms over excessive competition, knocking Alibaba and JD.com. Shanghai eased 0.2%, Hang Seng fell 0.7%, while the Nikkei firmed 0.1% and Kospi rose 0.4%.
Overnight, AUD/USD and NZD/USD were both up 0.7%, while USD/SGD and USD/CNH were down 0.3%.
USD jobless claims rise
Initial jobless claims increased by 4k to 229k in the week ending June 6, above the 220k forecast. The four-week average rose by 4k to 219k, the highest level since late February. Seasonal effects around Memorial Day distort the data, but this noise usually fades within a few weeks.
Continuing claims climbed by 24k to 1,795k for the week ending May 30, exceeding forecasts of 1,785k estimate. Claims have drifted higher, but the two-week average is still 138k below levels seen a year ago.
Looking at high beta FX, the AUD/USD trades 3% below its 6 May peak of 0.7278. Near-term support sits around the 100-day moving average at 0.7039. Next resistance comes in at the 21-day EMA at 0.7106, followed closely by the 50-day EMA at 0.7109.
AUD/CNH remains at a two-month low.
USD/CNH drifts lower even as China oil demand softens
China’s reduced oil buying has kept a lid on global prices, raising questions about how long this trend can continue. Imports have fallen by about 3 million barrels per day, driven by softer demand, a shift to alternative energy sources, and use of stored reserves.
Views differ on what comes next. Some expect China to ramp up purchases over the summer, while others believe reserves could last another six months. For now, weaker demand has helped ease price pressure and supported broader economic stability.
USD/CNH is just 0.1% above its recent low of 6.7581 from June 2. To build upward momentum, the pair needs to break above the 21-day EMA at 6.7838, before testing the 50-day EMA at 6.8103.
Meanwhile, SGD/CNH sits at a one-week high, though it remains close to a three-year low.
Antipodeans rebounds on risk on sentiment
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 8 – 12 June
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
