ForexLive European FX news wrap: Dollar up, markets weigh Iran-Israel developments

Headlines:

Markets:

• USD leads, NZD lags on the day
• European equities lower; S&P 500 futures down 0.1%
• US 10-year yields up 0.8 bps to 4.383%
• Gold up 0.3% to $3,377.58
• WTI crude up 0.6% to $74.39
• Bitcoin up 0.3% to $101,307

The dollar is trading up on the day but broader markets look to be taking the US intervention to the Iran-Israel conflict in stride to start the new week.

The weekend news hit risk sentiment early in Asia and saw oil prices spike up at the open today. But as we got to European trading, much of those fears have ebbed with oil even moving to fill the opening gap higher during the session.

US futures were down around 0.2% in the handover from Asia before gaining by about 0.3% and then now falling back slightly. That also saw European indices briefly pare losses before holding slightly lower on the day now.

As for oil, WTI crude hit a high of over $77 in early Asia trading before settling down near $75 when we got into European morning trade. That didn’t last too long as price fell to a low of $73.75 with the drop arrested by support from the 100-hour moving average.

If anything, it speaks to broader markets not completely buying into the idea that Iran will be able to block operations in the Strait of Hormuz. But at the same time, there are some worries about short-term disruptions and further escalation in the conflict.

In FX, the dollar held mostly steady early on before running away with gains across the board. USD/JPY in particular moved up from 147.00 to 148.00 during the session as traders are also sizing up the potential for oil market disruption on the Japanese economy.

Besides that, the dollar’s strength only added to the run up with EUR/USD also marked down by 0.5% to 1.1465 and GBP/USD down 0.6% to 1.3370 currently. Commodity currencies didn’t fare any better with USD/CAD up 0.4% to near 1.3800 and AUD/USD down 1.1% to 0.6375 on the day.

For now, it’s still all about headline risks as markets look to evaluate the continued impact of the Iran-Israel conflict. But once that slowly passes, do be reminded that we still have trade disputes to look forward to with Trump’s tariffs deadline of 9 July drawing ever closer. Adding to that will be potential month-end shenanigans especially in the latter stages of this week.