Dollar consolidates, Oil slips lower, equities helped by micron earnings

The strong Dollar advance seen in recent days is consolidating today. The G10 currencies are trading in narrow ranges. Most of them are +/- 0.1%. The New Zealand dollar and Norwegian krone are off a little more. The Canadian dollar is threatening to extend its losing streak for the 11th consecutive session. The greenback crept closer to JPY162 while Japanese officials remain on the sideline. 

Oil prices have continued to unwind their war gains, and reports suggest Israel is pulling out of some territory in southern Lebanon. Micron earnings beat expectations and it appears to have arrested the slide in chips and AI shares. The US reports May personal income, consumption, and deflators today, alongside May durable goods orders. The Atlanta Fed’s GDP tracker puts Q2 growth at 3%, up from 0.5% in Q4 25 and 1.6% in Q1 26. 

Prices 

G10

It seemed to have taken a 5-6 bp decline in the US two-year note yield to help stabilize the euro, but only after it fell to about $1.1325, its lowest level since May 2025. It overshot the (38.2%) retracement of the rally from last year’s low (~$1.0140), which was found at $1.1340, but it settled above it. The euro recovered to almost $1.1370 before stalling yesterday and has risen a few ticks more today but is holding below Tuesday’s low (~$1.1375). 

The market continues to hold the yen near its multi-year low, with the dollar slightly below JPY162. It is in a range so far today of about JPY161.55-JPY161.90. The actual or historical annualized volatility over the past month is the lowest among the G10 currencies, about 2.85%. The volatility implied in one-month options is near 7.5%, among the highest in the G10. The one-month risk reversals show a premium for dollar puts and this suggests dollar puts are being bought for protection by the longs. If calls were being sold, implied vol would be lower. 

Sterling was sold to $1.3140 before Europe closed yesterday, its lowest level since last November. It steadied in the North American afternoon but could not re-establish a foothold above $1.3180, more or less Tuesday’s low. It has reached almost $1.3200 today. Yesterday’s high was about $1.3210, around where the five-day moving average is found, which sterling has not settled above since June 16. 

The US dollar extended its streak against the Canadian dollar and rose for the tenth consecutive session yesterday. It reached almost CAD1.4250 and closed above Tuesday’s high. It is consolidating in a narrow range of about CAD1.4225-CAD!.4245 today. The next technical target is near CAD1.43. However, we note that US two-year yields the and premium over Canada, which have risen alongside the dollar have softened for the past two sessions. 

The Australian dollar has been unable to sustain even the most modest of upticks this week. It was sold to new lows late in the session, near $0.6880 yesterday. It has not been this low since April 6. The Aussie settled below the lower Bollinger Band for the second consecutive session yesterday. It is consolidating quietly and trading in a narrow range around $0.6900. Nearby support may be in the $0.6860 area that houses the 200-day moving average and the late March low.

EM

The dollar’s two-day surge against the Mexican peso extended yesterday. The greenback reached MXN17.6765, the highest since early April. The next upside target may be in the MXN17.75-MXN17.80 area. It is trading in MXN17.5870-MXN17.6350 range today. The dollar rose above BRL5.20 for the first time since the end of March. The 200-day moving average, which the greenback has not traded above this year, is near BRL5.2475.

The offshore yuan fell to a new one-month low yesterday as the broad dollar gains took a toll. The dollar reached almost CNH6.82. Consolidative forces are evident today with the greenback holding below CNH6.8165 and above CNH6.80. The PBOC set the dollar’s fix slightly higher for the fifth consecutive session (CNY6.8209 vs CNH6.8195 yesterday). 

The further pullback in oil prices helped lift the Indian rupee to a marginal new high since early May before backing off. The dollar gapped lower and fell to almost INR94.14. It recovered and settled slightly above INR94.40. The gap extends from today’s high (~INR94.5565) to yesterday’s low (~INR94.5975). 

Other markets

Micron’s earning results have lifted sentiment in the equity markets today. Most of the large bourses in the Asia Pacific region rose but Hong Kong, mainland shares that trade there and Australia. The MSCI regional index rose for the first time in three sessions. Europe’s Stoxx 600 is up about 0.6%, and if it is sustained, it would be the largest gain in nearly two weeks. The US Nasdaq futures are up around 2%, while the S&P futures are trading about 0.7% better. 

Benchmark 10-year yields are lower today helped by the drop in oil prices and the nearly 10 bp decline in the US Treasury yield yesterday. It slipped below 4.40% yesterday, the lowest since early May. Japan’s 10-year yield fell three basis points today to about 2.61%, while European yields are mostly a little softer. The 10-year US Treasury yield is 1-2 bp firmer to edge toward 4.41%.

The precious metals are less precious. Gold was dumped to a new low for the year, slightly below $3960. It settled near session lows. It is stuck in its trough. It reached almost $4019 today but is near $3986 ahead of the US open. It fell by around 3.4% yesterday, while silver was taken for around 8%. It fell to almost $55.60 yesterday, its lowest level since last November. It too is consolidating near yesterday’s lows. 

August WTI fell below $70 yesterday for the first time the early days of the Middle East war. It briefly traded below the 200-day moving average (~$70.10) for the first time since early February. The losses were extended to $68.90 today. On eve of the war, it settled at $65.70. 

Data

Today’s US data will likely show that personal consumption rose faster than income in May for the fourth consecutive month. The median forecast in Bloomberg’s survey calls for a 0.6% rise in consumption and a 0.4% increase in income. In April, income was flat while spending rose by 0.5%. Economists have a good handle on the deflators after the CPI and PPI have been reported and do not offer much new information. The headline is expected to rise by 0.5% for a 4.1% year-over-year pace. The core rate is seen rising by 0.3% for a 3.4% year-over-year pace. Separately, durable goods orders, which jumped by 8% in April, flattered by Boeing orders, may have pulled back by 5%. However, excluding aircraft and defense orders, a 0.6% gain is expected after a 1.0% decline in April. Weekly jobless claims are likely overshadowed by other data points. Due to next week’s holiday, the June nonfarm payroll report will be released next Thursday, and the early forecasts are around 118k (172k in May) and are consistent with modest improvement after slow 2025 (average monthly nonfarm payroll increase 10k vs 114k in the first five months of 2026).  The Fed’s Bowman, Goolsbee, and Williams speak today. 

Canada reports April employment via the establishment survey. The household survey in April showed a loss of 17.7k jobs after gaining 14.1k in March. The establishment survey reported a 31.8k loss in March. The market does not seem particularly sensitive to the time series and the swaps market sees little chance of a change in Bank of Canada’s policy settings until at least late Q4. 

Mexico’s May unemployment may have crept up to 2.6% from 2.46%. With such a large informal labor market, the peso tends not to be responsive to the official unemployment rate. The central bank meets later today and there is little doubt over the outcome: unchanged overnight rate at 6.50%. 

Australia's labor market improved in May, and household spending rebounded from the April slide. Of the 40.3k increase in overall jobs last month, 35.2k were full-time posts. In April, Australia lost a revised 40.7k jobs (initially -18.6k), of which 21.6k (initially10.7k) were full-time positions. The participation rate ticked up to 66.7% (from a revised 66.6%), while the unemployment rate slipped back to 4.4% from 4.5%. Household spending jumped by 1.3% in May after falling 1.1% in April. In the futures market, the odds of a rate hike before the end of the year slipped.