Summary

• While equities and bonds rallied strongly yesterday, the dollar bottomed in early North American trading and gradually pared some of its decline yesterday amid heightened optimism that the war on Iran is drawing to a close.
• Preliminary data lends credence to claims that Japanese officials intervened again yesterday to strengthen the yen.
• The Chinese yuan has extended its gains today. Against the offshore yuan, the dollar was sold below CNH6.80 for the first time since February 2023.
• Asia-Pacific equities mostly rallied today. The return of Japan from its long holiday saw the Nikkei soar nearly 5.6%. Hong Kong, Taiwan, South Korea, and several small bourses gained more than 1%.
• After rising 2.2% yesterday, Europe’s STOXX 600 is off by about 0.2% in the European morning. US index futures are hovering around little-changed levels.

Hopes that the war on Iran is nearly over and that the Strait of Hormuz will open soon and ease the supply shock that has rippled across the global markets continues to underpin risk

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