The dollar continues to struggle as June trading begins, affected by trade uncertainties, particularly concerning US tariffs. Recent developments include a temporary reinstatement of reciprocal tariffs and discussions by the US to increase tariffs on steel and aluminium. The ongoing trade tensions with China may further dampen market outlook in the coming days.

In currency movements, EUR/USD has risen to 1.1415, up 0.6%, and USD/JPY has decreased to 142.75, down 0.9%. GBP/USD and AUD/USD both show an increase of 0.6% and 0.7%, respectively. Conversely, USD/CAD shows a decrease of 0.3%, nearing 1.3700. European equities are trending lower, with S&P 500 futures down 0.4%, adding to the cautious sentiment.

Commodity Prices And Economic Updates

Gold has increased by 2.0% to $3,354.98 amid ongoing uncertainty. Oil prices have also received a boost with WTI crude climbing over 4% to $63.40, following an OPEC+ decision to increase output less than anticipated. In other economic updates, the Eurozone’s final manufacturing PMI for May is confirmed at 49.4, while the UK’s figures have been adjusted upwards to 46.4. Meanwhile, Switzerland’s GDP growth is slightly above expectations at 0.5% quarter-on-quarter.

What we’re seeing in the above data is an unmistakable shift—it’s not driven by volatility for volatility’s sake, but by mounting friction in global trade policies that are starting to leave a deeper economic imprint. With tariffs back in play, especially on materials like steel and aluminium, markets have begun to price in downside risks more actively. Measured moves in major currency pairs reflect this changing mood: a firmer euro and pound suggest recalibrations in capital flow as investors reassess exposure to dollar-denominated assets.

The move in EUR/USD past 1.14 looks less technical than fundamental. Given that US trade barriers are now not just a threat but a slowly broadening reality, it’s clear why dollar short positions have found fresh energy. The Japanese yen’s climb, usually seen during turbulent moments, is telling us something more structural: that safety trades are quietly but persistently coming back. Widening trade deficits and policy inconsistency are beginning to bite into the dollar’s yield advantage.

Equity, Commodity, And Economic Signals

Equity softness on both sides of the Atlantic also fits this broader caution. As S&P 500 futures ease and European equities drag, investors’ appetite for riskier assets has started to recalibrate, likely in anticipation of thinner profit margins and cost-push pressures from higher import levies. Moves in indices haven’t been dramatic, but they’ve been orderly—which suggests rebalancing, not panic.

Commodity strength is providing further signals. The jump in gold—outpacing most expectations—reinforces market concern over medium-term inflation drivers and geopolitics. WTI’s price bump, following the more restrained output hike from OPEC+, has compounded this movement. Rather than relief from fuel costs, we’re moving further away from it.

As for economic data, the Eurozone’s manufacturing sentiment remaining just a whisker below 50 hints at ongoing contraction, but it’s not worsening materially. This suggests that while trade pressures are firm, business scarring hasn’t yet deepened dramatically across the bloc. The upgraded UK PMI, though still contractive, may offer short-term positioning opportunities in sterling if local sentiment continues to stabilise. And Switzerland, with stronger-than-forecast growth, quietly reaffirms that smaller, trade-resilient economies can still defy broader slowdowns—for now.

For those managing exposure in derivatives, these moves illustrate that market conviction is no longer just leaning—it’s starting to walk. Rates will need to be watched less on the assumption of central bank interventions and more on how real supply chains respond in the coming weeks. Existing correlations also appear to be fraying: stronger commodities, weaker dollar, and risk-off equities now coexist, which means assumptions based on 2023’s trends may not hold.

With markets pricing in more trade-driven disruptions, positioning should be cautious but deliberate. Movement in implied vols suggests hedging has picked up, especially in longer-dated options, indicating a readiness to hold protection beyond headline cycles. Recent spot moves and flatter risk curves point to more than just reflexive reactions; they imply that these policies are finally starting to become material from a price discovery standpoint.

We’ve shifted from watchful to responsive. What comes next depends less on central bankers and more on policy consistency and supply chain resilience. And so, short-term strategy needs to reflect that not everything reverts quickly—some pressures stay.

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