Dollar strengthens against major peers as equity markets decline

As the North American trading session nears, the U.S. dollar has climbed against all seven major currencies. The largest gain is versus the Australian dollar, and the smallest is against the Canadian dollar.

• AUDUSD at 0.7068, greenback up 0.62%
• NZDUSD at 0.5693, dollar higher by 0.56%
• GBPUSD at 1.3283, dollar up 0.42%
• USDJPY at 157.91, dollar stronger by 0.34%
• EURUSD at 1.1410, dollar gaining 0.32%
• USDCHF at 0.8226, dollar advancing 0.26%
• USDCAD at 1.4087, dollar edging up 0.18%

Diplomatic talks have started in the Middle East, yet risks persist.

Yesterday's United Nations sessions produced both a cautionary message and a channel for diplomacy. Trump cautioned Iran about potential additional military strikes should an agreement not be reached. Subsequently, American and Iranian envoys exchanged messages via go-betweens during the UN General Assembly. Tehran has set requirements for restarting shipments through the Strait of Hormuz, but no accord has been reached. Additionally, Houthi operations in Yemen continue to threaten Red Sea shipping. The key question for oil markets is whether the negotiations yield a pact that eases the passage of energy supplies through the area.

U.S. equity futures were trading in the red at 7:37 a.m. ET:

• Dow futures down 101 points
• Nasdaq futures down 94 points
• S&P futures down 5.64 points

Treasury bond yields moved up:

• 2-year at 4.787%, up roughly 1.0 basis point
• 5-year at 4.855%, up about 1.3 basis points
• 10-year at 4.978%, up about 1.1 basis points
• 30-year at 5.311%, up about 0.8 basis points

Commodity markets presented a mixed landscape during the morning update. Brent crude gained, whereas WTI slipped slightly even with ongoing Middle East threats.

• Brent crude at $99.83, up 0.58%
• WTI crude at $90.28, down 0.27%
• Gold near $4,302, down about 1.3%
• Silver near $64.92, down about 1.3%
• Bitcoin near $85,521, down 0.79%

All eight flash PMI figures exceeded 50, pointing to growth in the manufacturing and service sectors that were surveyed. However, not all sectors picked up steam. Services activity improved in France, Germany and the eurozone, while manufacturing readings softened in France and Germany.

• France manufacturing at 50.3, below the 50.9 forecast and the 51.1 prior reading
• France services at 51.4, above the 48.3 estimate and the 48.0 prior
• Germany manufacturing at 53.8, below the 54.1 forecast and the 54.3 prior
• Germany services at 52.9, above the 49.9 consensus and the 49.7 prior
• Eurozone manufacturing at 52.7, matching the 52.6 forecast and unchanged from 52.7 prior
• Eurozone services at 53.0, above the 51.4 estimate and the 51.6 prior
• UK manufacturing at 52.0, above the 51.5 forecast and the 51.7 prior
• UK services at 51.7, below the 52.0 consensus and the 52.5 prior

U.S. manufacturing and services PMIs are forecast to stay above 50, though the projections are a bit lower than the previous figures. The detail on prices and employment will be scrutinized for clues on Treasury yields and the dollar.

• Manufacturing PMI expected at 53.6 versus 53.9 prior
• Services PMI expected at 56.0 versus 56.5 prior
• Composite PMI: no forecast shown; prior 56.0