The US Dollar Index (DXY) weakened toward the 98.90 area on Friday as improving risk sentiment reduced demand for traditional safe-haven assets. Although the latest US Core Personal Consumption Expenditures (PCE) Price Index remained unchanged at 3.3% year-over-year in April, reinforcing expectations that the Federal Reserve could maintain higher interest rates for longer, investors focused primarily on geopolitical developments. Reports indicating that the United States and Iran had reached a memorandum of understanding to extend their ceasefire by 60 days, reopen the Strait of Hormuz, and begin nuclear negotiations boosted confidence across financial markets.
The EUR/USD pair advanced toward 1.1670, supported by broad-based US Dollar weakness and improving investor appetite for risk.
Meanwhile, GBP/USD climbed toward the 1.3470 level as reduced demand for the Greenback provided support for the British pound. Sterling remained relatively resilient despite ongoing concerns about the United Kingdom’s fiscal position and slowing economic growth.
In Japan, USD/JPY traded near 159.30. While elevated US Treasury yields continued to offer support to the pair, a softer Dollar limited further gains. The Japanese yen remained under pressure after Tokyo Core CPI slowed to 1.4% year-over-year in May. Additionally, Kazuo Ueda cautioned that energy-related shocks could become more persistent if they begin influencing wages and inflation expectations.
The AUD/USD pair rose toward 0.7190, benefiting from stronger risk sentiment as progress in US-Iran negotiations encouraged demand for growth- and commodity-linked currencies.
In the commodities market, West Texas Intermediate (WTI) crude oil traded near $88 per barrel. Expectations of an extended ceasefire and the potential reopening of the Strait of Hormuz helped ease concerns over supply disruptions, limiting upward pressure on oil prices.
Despite the improved risk backdrop, gold rallied toward the $4,550 area as investors continued to balance optimism over geopolitical developments against lingering uncertainty and persistent global inflation risks. The precious metal remained supported by its role as a hedge against both inflation and geopolitical instability.
Looking Ahead: Key Economic Insights on the Horizon
Market participants will closely monitor a series of speeches and events involving major central bank officials in the coming days, seeking fresh clues on the outlook for interest rates, inflation, and economic growth.
Friday, May 29
- Catherine Mann (Bank of England)
Sunday, May 31
- Megan Greene (Bank of England)
- Christopher Waller (Federal Reserve)
- Jerome Powell (Federal Reserve)
Tuesday, June 2
- Boris Vujčić (European Central Bank policymaker)
- Andrew Bailey
- Olaf Sleijpen (European Central Bank policymaker)
- Megan Greene
Wednesday, June 3
- Kazuo Ueda
- Frank Elderson
- Michael Barr
- Piero Cipollone
- Bank of England Monetary Policy Report Hearings
- Federal Reserve Beige Book release
Thursday, June 4
- Christine Lagarde
- Andrew Bailey
Friday, June 5
- Swati Dhingra
- Andrew Bailey
The week’s schedule places particular emphasis on comments from the Federal Reserve, European Central Bank, Bank of England, and Bank of Japan, with investors looking for signals on the future path of monetary policy. Remarks from Powell, Lagarde, Bailey, and Ueda, alongside the Fed’s Beige Book and the BoE’s policy hearings, could have a significant impact on currency, bond, and equity markets.
Central Bank Meetings and Key Economic Data Set to Drive Markets
Investors will face a busy week of economic data and policy-related events, with releases from China, the Eurozone, the United States, Canada, Australia, Japan, New Zealand, and Switzerland likely to influence expectations for growth, inflation, and interest rates.
Friday, May 29
- China Manufacturing PMI
- China Non-Manufacturing PMI
Sunday, May 31
- Australia TD-MI Inflation Gauge
- China Caixin Manufacturing PMI
Monday, June 1
- Eurozone Retail Sales
- Switzerland Retail Sales
- Switzerland GDP
- Germany Manufacturing PMI
- France Manufacturing PMI
- Eurozone Manufacturing PMI
- Eurozone Unemployment Rate
- Canada Manufacturing PMI
- US Manufacturing PMI
- Australia Building Permits
Tuesday, June 2
- Eurozone CPI Inflation
- US JOLTS Job Openings
- New Zealand Building Permits
- Australia AiG Industry Index
- Australia PMI
- Australia Q1 GDP
- China Caixin Services PMI
Wednesday, June 3
- Spain Services PMI
- Germany Services PMI
- Eurozone Services PMI
- Eurozone Producer Price Index (PPI)
- US ADP Employment Change (4-week average)
- US Services PMI
- US Factory Orders
- Australia Trade Balance
Thursday, June 4
- Switzerland CPI Inflation
- Eurozone Retail Sales
- US Challenger Job Cuts
- US Initial Jobless Claims
- US Nonfarm Productivity
- US Unit Labor Costs
- Japan Labor Cash Earnings
Friday, June 5
- Eurozone GDP
- Eurozone Employment Change
- Canada Employment Report
- Canada Average Hourly Wages
- Canada Unemployment Rate
- US Nonfarm Payrolls (NFP)
- US Unemployment Rate
- US Average Hourly Earnings
- US Labor Force Participation Rate
- Canada Ivey PMI
Among the week’s highlights, investors will pay particular attention to Eurozone CPI, Australia’s first-quarter GDP, US JOLTS job openings, ADP employment data, and especially Friday’s US Nonfarm Payrolls report, which could provide critical insight into labor market conditions and influence expectations for future monetary policy decisions. The combination of inflation, growth, and employment data is likely to play a key role in determining the direction of major currencies, equities, bonds, and commodities throughout the week.
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