Dollar Hits Six-Week Low as Easing Trade Tensions Lift Risk Sentiment

Market Overview

With trade tensions between the U.S. and Europe temporarily easing, U.S. equity futures climbed over 1% during the Memorial Day market closure. European markets also staged a broad rebound, with the pan-European index snapping a three-day losing streak to close 1% higher. Despite a modest pullback in gold from its two-week high, risk appetite was buoyed after former President Trump unexpectedly delayed the implementation of 50% tariffs on EU imports from June 1 to July 9. This short-term reprieve in geopolitical risk helped ease safe-haven demand. Meanwhile, the U.S. Dollar Index fell to its lowest level in nearly six weeks, providing near-term support for dollar-denominated gold. Investors are now turning their attention to the Eurozone's economic outlook and upcoming policy signals.

Key Market Watch

● OPEC+ Expected to Ramp Up Output Again This Week

OPEC+ is reportedly planning a third consecutive month of aggressive production increases, potentially adding 411,000 barrels per day. The move appears aimed at pressuring U.S. shale producers, who are struggling with rising costs, depleted premium wells, and tariff-related headwinds. With crude hovering near the critical $60/bbl breakeven level for U.S. shale, OPEC+ may be seizing a rare opportunity to reclaim lost market share.

● Japan Pushes for Trade Deal by Mid-June

Amid the third round of U.S.-Japan tariff negotiations, Japan is leveraging key strategic assets, including a $44 billion Alaska LNG pipeline project and proprietary icebreaker shipbuilding technology. Tokyo aims to first secure a ministerial-level agreement, paving the way for a potential handshake between Shigeru Ishiba and Trump during the G7 Leaders Summit in June. Japan hopes to resolve the trade dispute ahead of the countrys upper house elections in early July.

Data Highlights to Watch (GMT+8)

• 20:30 – U.S. April Durable Goods Orders (MoM)

• 21:00 – U.S. March FHFA House Price Index (MoM); U.S. March S&P/CS20 Non-Seasonally Adjusted Home Price Index (YoY)

• 22:00 – U.S. May Conference Board Consumer Confidence Index

• 22:30 – U.S. May Dallas Fed Manufacturing Business Index