Geopolitical Tensions Bolster US Dollar

Market sentiment is being shaped by heightened geopolitical risk, contributing to strength in the US Dollar. Uncertainty persists around a US-Iran deal as the US president is reportedly seeking changes, while separate Mideast tensions are escalating as Israeli troops advance into Lebanon, pushing oil prices higher on supply concerns. This environment has lifted the US Dollar Index above the 99.00 level as traders seek safety, weighing on currencies like the Japanese Yen.

China Manufacturing Growth Moderates

Economic data from China indicated that factory activity continued to expand in May, though at a slightly slower pace than the previous month. The private RatingDog Manufacturing PMI registered 51.8, down from April's 52.2, but still marking the sixth straight month of expansion. The report had a muted impact on commodity-sensitive currencies, with the Australian and New Zealand dollars remaining subdued following the release.

Fed's Independence Highlighted

Former Federal Reserve Chair Jerome Powell emphasized that the central bank's independence is critical for public trust and a stable economy. He cautioned that allowing political leaders to dismiss Fed officials based on policy disagreements would erode the institution's credibility.