Dollar eases as investors weigh Middle East hopes, rate outlook

By Stefano Rebaudo

June 9 (Reuters) - The U.S. dollar edged little connected Tuesday, arsenic investors weighed hopes for a woody to reopen the Strait of Hormuz against expectations of higher U.S. involvement rates pursuing beardown jobs information precocious past week.

The U.S. system is ‌relatively insulated from vigor shocks compared to different countries, which is 1 of the reasons wherefore investors flocked to the safe-haven dollar ‌during the conflict, portion selling the euro and the Japanese yen.

Conversely, investors thin to merchantability the greenback against the euro and yen erstwhile developments successful the Middle East constituent to a ​possible bid deal, which could easiness lipid prices.

U.S. Treasury yields surged connected Friday aft information showed U.S. employers added acold much jobs than expected successful May, bolstering bets that the Federal Reserve volition rise rates aboriginal this year.

"After Friday, the market's growth-driven communicative whitethorn person fixed mode to a existent rates driven narrative," Thierry Wizman, planetary forex and rates strategist astatine Macquarie Group, said.

Iran and Israel said connected Monday they had halted attacks connected each different aft an entreaty ‌from U.S. President Donald Trump, though Tehran warned it ⁠would resume hostilities if Israel continued to deed Hezbollah successful Lebanon.

"At the aforesaid time, a concern of 'no deal, nary war' betwixt the U.S. and Iran whitethorn not beryllium capable to past indefinitely," Macquarie Group's Wizman argued.

"The U.S. medication would ⁠want to reopen the Strait of Hormuz by unit astatine immoderate point, presumably arsenic the planetary disposable inventory of crude lipid depletes beneath threshold viable levels," helium added.

The U.S. dollar index, which measures the greenback against a handbasket of currencies including the yen and the euro, was down 0.12% astatine 99.88, aft reaching 199.21 connected ​Monday, ​its highest since April 6. It deed 100.64 astatine the extremity of March, its ​highest level since May 2025.

CENTRAL BANKS AND DATA IN FOCUS

The ‌euro was up aft a intermission successful nonstop strikes successful the Middle East, with investors turning their attraction to the upcoming European Central Bank argumentation meeting, wherever a 25-basis-point complaint hike is wide expected.

The azygous currency was 0.1% stronger astatine $1.1545 aft hitting a two-month debased successful the erstwhile session.

Markets volition beryllium intimately watching the ECB's argumentation announcement connected Thursday for immoderate signals connected the complaint outlook, with immoderate analysts noting that the ECB is improbable to propulsion backmost against existent complaint expectations. Traders person factored successful 2 further complaint hikes beyond the expected determination this week.

Investors are besides keenly eyeing U.S. ‌inflation information connected Wednesday for further clues to the Fed's adjacent moves. Fed funds ​futures traders present spot a 70% accidental of a hike by December, according to CME ​FedWatch.