ForexLive European FX news wrap: Dollar lightly lower as risk remains cautious

Headlines:

• Dollar keeps a touch lower so far in European morning trade
• Iran’s Supreme Leader Khamenei: Israel made a huge mistake and will be punished for that
• Former Iran Economy Minister calls for control over the Strait of Hormuz for 100 days
• What is expected for the FOMC decision?
• ECB’s Centeno says very worried about growth in Europe
• ECB’s Panetta: ECB to Stay Flexible, Decide Meeting by Meeting
• UK May CPI +3.4% vs +3.4% y/y expected
• Eurozone May final CPI +1.9% vs +1.9% y/y prelim
• US MBA mortgage applications w.e. 13 June -2.6% vs +12.5% prior
• “Long gold” remains the most crowded trade for the third month in a row

Markets:

• AUD leads, CHF lags on the day
• European equities lower; S&P 500 futures up 0.1%
• US 10-year yields down 1.8 bps to 4.373%
• Gold down 0.1% to $3,383.23
• WTI crude down 0.4% to $73.45
• Bitcoin flat at $104,475

All eyes stayed on the Middle East with markets eyeing the potential for the US to intervene in the conflict between Iran and Israel.

There was some cautious optimism earlier on in the day but that has since been tempered with after Iran’s supreme leader Khamenei came out with a statement to fight back hard, his first since Friday last week.

European indices held marginal gains earlier in the session before tilting lower while S&P 500 futures were up around 0.3% before giving all of that back in the past hour. It’s now over to US trading to see what Trump wants to do to get involved there.

In FX, there wasn’t too much action with the dollar keeping just lightly lower on the session.

EUR/USD is up 0.2% to 1.1500 with large option expiries at the figure level pulling price action for the most part in European trading. USD/JPY is also down a touch to 144.93 with buyers continuing to struggle to build on the push above 145.00 yesterday. Meanwhile, AUD/USD is up 0.3% to 0.6497 but again struggling to firmly shake off the 0.6500 mark on any push higher since last month.

The tone as we look to the session ahead is one with caution but I would argue it’s more so cautious optimism. Markets are wanting to move on from the geopolitical tensions but headline risks remain paramount and that is stopping any real positive turn for the time being.

Coming up, we do have US weekly jobless claims and the FOMC meeting decision on the agenda. All that before a US holiday tomorrow.

This article was written by Justin Low at www.forexlive.com.