Key facts
- The U.S. dollar eased as new strikes in the Middle East and a surge in May consumer inflation kept investors uneasy.
- U.S. consumer inflation rose 4.2% in the 12 months through May, the largest gain since April 2023, meeting expectations.
- Core U.S. CPI gained 0.2% month-on-month in May, easing from April's 0.4% rise.
- Traders have fully priced in a 25-basis-point U.S. rate hike in December.
- The dollar index eased to 99.903 after U.S. military confirmed strikes against multiple targets in Iran.
- European shares were flat as investors assessed U.S.-Iran tensions and awaited the European Central Bank's policy decision.
The U.S. dollar wobbled as renewed strikes in the Middle East and a surge in May consumer inflation to a three-year high kept investors uneasy about the Federal Reserve's monetary policy outlook. The dollar index eased to 99.903 after the U.S. military confirmed strikes against multiple targets in Iran. President Donald Trump vowed further attacks if a peace deal was not secured.
U.S. consumer prices rose 4.2% in the 12 months through May, the largest increase since April 2023, meeting expectations. Core CPI gained 0.2% month-on-month in May, easing from April's 0.4% rise, bolstering hopes that price pressures from the energy shock might be contained. Traders have fully priced in a 25-basis-point U.S. rate hike by December.
European shares were flat as investors assessed U.S.-Iran tensions and awaited the European Central Bank's policy decision. The ECB is poised to raise rates to tackle inflation, which is above 3% in the 21-country bloc. The Japanese yen was at 160.52 per dollar, and the Australian dollar was at $0.7007.