Dollar Mixed on Month End Flows

The U.S. Dollar is trading in mixed ranges, primarily as a result of month- and quarter-end rebalancing flows. A cargo ship in the Strait of Hormuz was struck by the Iranian Revolutionary Guard Corps near the coast of Oman late Thursday, marking the first such attack since an interim peace agreement was signed with the U.S. at the conclusion of last week’s G7 summit. No injuries were reported despite the ship, called Ever Lovely, sustaining damage to its bridge. Shipping traffic continues to flow through the Strait today notwithstanding the attack, and oil prices are on track for their largest weekly drop in a month. Despite today’s weakness, the Dollar is up roughly half a percent this week and more than 2% for the month of June.

EUR

The Euro is up against the Buck this morning, reversing some of this week’s sharp decline. The same month- and quarter-end rebalancing flows that are weighing on the Dollar are providing modest support for the common currency. Consumer inflation expectations for the Eurozone were released this morning, and the 1-year figure fell to 3.5%, well below the 3.9% expected. Coupled with declining oil prices, this reduces the pressure on the European Central Bank to hike interest rates aggressively, and as a result Traders are no longer pricing in an additional full hike from the ECB for 2026. That being said, the 3-year figure came in slightly above expectations at 2.9%, leaving the longer-term policy path more uncertain.

JPY

The Japanese Yen is up against the Greenback this morning after briefly approaching its weakest level since December 1986 overnight. Further Yen weakness raises intervention risk from Japanese financial authorities. Tokyo Consumer Price Index (CPI) numbers, a leading indicator for national figures, were released overnight and, excluding food, showed that inflation accelerated to 1.6% in June from 1.3% in May. The advance lifted expectations for a further interest rate hike from the Bank of Japan as concerns mount that inflation may potentially overshoot the BoJ’s target.