Headlines:

• Deal or no deal? Markets continue to eye US-Iran headlines ahead of the weekend
• Japan spent ¥11.7 trillion on foreign exchange interventions in the past month
• Japan chief cabinet secretary says extremely concerned about speculative FX moves
• Fed policymaker Schmid: My primary concern is inflation, which is too hot
• BOE governor Bailey: We have already tightened policy by taking rate cuts off the table
• German states see slight drop in inflation pressures in May
• French inflation continues to pick up in May, highest reading since February 2024
• Inflation pressures continue to hold up in Spain, core prices nudge a little higher
• Italy inflation continues to push up in May, core prices nudge higher as well
• German unemployment falls unexpectedly in May, jobless rate down slightly as well
• German import prices climb further in April as US-Iran conflict continues to reverberate

Markets:

• WTI crude down 1.7% to $87.40
• DAX up 0.1% while CAC 40 up 0.7% on the day
• S&P 500 futures up 0.1%, Nasdaq futures up 0.1%
• US dollar lightly changed across the board
• US 10-year yields down 1.4 bps to 4.44%
• Gold higher by 0.8% to $4,530

As we get into the final stretch of the week, the US and Iran are still yet to formalise a deal and sign off on the expected memorandum of understanding. This is one that has been “imminent” since the past weekend already. Yet, here we are.

It seems like we are close but come what may, this doesn’t mean the end of the conflict – even if the deal is going to be labelled as such. Just a bit of background:

• How close are we actually to a US-Iran endgame?
• US and Iran know what the puzzle pieces are, but can they fit them all together?

Still, markets remain hopeful and we’re seeing a steadier mood in European morning trade today.

Oil prices are down once again with WTI crude lower by 1.7% to $87.40. That comes as equities are continuing to nudge up, with S&P 500 futures up 0.1% following another round of gains in Wall Street yesterday. In Europe, we’re seeing a steadier mood too with the DAX up 0.1% and CAC 40 up 0.7% today.

Even though euro area inflation numbers are seen higher at the balance in May, bond yields are keeping down as US-Iran developments continue to override other elements at the moment. Besides Germany, price pressures were seen pushing up in France, Spain, and Italy.

10-year yields in France are down 3 bps to 3.56% while 10-year yields in the US are down 1.4 bps to 4.44% currently.

In FX, there wasn’t much action with the dollar holding steadier for the most part. EUR/USD is marginally lower around 1.1640 with large option expiries at 1.1650 keeping price action in check. Meanwhile, USD/JPY continues to keep around 159.20-30 levels even after Japan intervention data revealed a sizable amount spent by Tokyo officials in trying to pin down the currency pair during the past month.

Besides that, gold prices are seen higher with the precious metal pushing up by 0.8% to $4,530 in keeping with the recovery since trading yesterday.

It’s all now on whether we will see a US-Iran deal finally announced. And when the details come to surface, is it going to be a case of buy the rumour, sell the fact?

This article was written by Justin Low at investinglive.com.