(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Mike Dolan

LONDON, June 12 (Reuters) - What matters in U.S. and

global markets today

I'm excited to announce that I'm now part of

Reuters Open Interest (ROI)

, an essential new source for data-driven, expert commentary

on market and economic trends. You can find ROI on the

Reuters website

, and you can follow us on

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and

X.

Intro

Not for the first time this year, markets are being hit by

multiple crosscurrents. Today it's an oil price surge driven by

Middle East tensions alongside surprisingly benign U.S.

inflation readings.

I discuss this and the rest of today's market news below. In

today's column, I explore a surprising twist in the global

dollar debate that could reshape how investors think about

currency risk.

I'll be off tomorrow so Morning Bid will take a day's

holiday, but back to regular programming on Monday.

Today's Market Minute

* U.S. President Donald Trump said on Wednesday U.S. personnel

were being moved out of the Middle East because "it could be a

dangerous place", adding that the United States would not allow

Iran to have a nuclear weapon.

* U.S. consumer prices increased less than expected in May as

cheaper gasoline partially offset higher rents, but inflation is

expected to accelerate in the coming months on the back of the

Trump administration's import tariffs.

*An Air India plane bound for London with 242 people on

board crashed minutes after taking off from India's western city

of Ahmedabad on Thursday, the airline and police said, and

India's federal health minister said that "many people" were

killed.

* U.S. trade negotiations have transitioned from their

tumultuous opening act into a new chapter: the Slow Grind. It

may be less turbulent than this past spring's drama, but no less

worrying for investors.

* A proposed U.S. tax targeting foreign investors could hurt

European energy giants that operate in America's booming oil and

gas sector, undermining President Donald Trump's energy

dominance agenda. Read the latest from ROI columnist Ron Bousso.

Oil pops, dollar drops

With investors trying to read the runes of this week's

'framework' trade agreement between the U.S. and China on

Wednesday, worries surfaced about the state of play in the

Middle East after the U.S. announced that it was moving

personnel out of the region ahead of talks with Iran over the

latter's nuclear-related activity.

Crude oil prices promptly jumped 4% and hit their

highest in two months before giving up some of those gains

earlier today. European travel stocks and auto makers fell more

than 2% on Thursday on the jitters. Gold, however, was

only marginally higher, and the dollar fell.

While no specific reason was given for the U.S. personnel

orders, the U.N. nuclear watchdog passed a resolution on

Thursday formally declaring Iran in breach of its

non-proliferation obligations for the first time in almost 20

years.

Concern about Israeli threats to Iran's nuclear facilities

inevitably ramped up.

The prospect of higher energy prices at a time of

tariff-related inflation concerns will certainly rankle.

But so far at least, the Trump administration's import

levies aren't putting much upward pressure on U.S. consumer

prices, as May CPI came in below forecasts on Wednesday. Core

annual producer price readings due out later today are expected

to be steady.

Despite this week's crude gains, year-on-year oil prices are

still down more than 10%. And two-year U.S. 'breakeven'

inflation rates in the inflation-protected Treasury market fell

to their lowest of the year at 2.44%.

Meanwhile, U.S. Treasury yields fell on a mix of soft

inflation and robust demand at the 10-year auction on Wednesday.

Some $22 billion of 30-year bonds are up for grabs later today,

testing the recently shaky demand for long-duration debt.

Federal Reserve expectations haven't shifted greatly, with

two quarter-point interest rate cuts still priced by yearend.

No move is expected before September, even though President

Donald Trump once again called for an immediate full percentage

point rate cut after the CPI report.

The dollar remains under pressure however, raising more

concern about the absence of its traditional 'safe haven' role

at a time of rising geopolitical tensions.

The dollar index fell to its lowest level since

April, with the euro surging above $1.15 to within a

whisker of its best levels since 2021.

Sterling was a standout loser against the euro,

falling to its weakest against the single currency in a month

after a surprisingly sharp drop in April UK GDP.

Stocks were slightly shaken by the whole picture, with the

S&P500 ending in the red on the Middle East news on

Wednesday and futures down almost half a percentage point ahead

of Thursday's open. Chinese, Japanese and European bourses were

all in the red on Thursday. Only South Korea's Kospi bucked the

trend.

The wider trade war picture remained uncertain despite the

U.S.-China progress, with details still patchy as the negotiated

deal in London awaited final approval.

Trump on Wednesday said he was very happy with the trade

deal, as it restored a fragile truce between the two biggest

economies, claiming China agreed to free up rare earth supplies

in exchange for the U.S. allowing Chinese students to attend

U.S. colleges.

But he also insisted: "We are getting a total of 55%

tariffs, China is getting 10%."

White House officials said the 55% represents the sum of a

baseline 10% "reciprocal" tariff Trump has imposed on goods

imported from nearly all U.S. trading partners, the 20%

fentanyl-related tariffs, and pre-existing 25% levies on imports

from China that were put in place during Trump's first term.

Commerce Secretary Howard Lutnick said the 55% rate on

Chinese imports is fixed and unalterable. Treasury Secretary

Scott Bessent said the deal would not reduce U.S. export

restrictions on high-end artificial intelligence chips.

China on Thursday affirmed the trade deal, and a foreign

ministry spokesperson said: "Now that a consensus has been

reached, both sides should abide by it."

But with less than four weeks to go before the expiration of

the 90-day pause on U.S. tariffs worldwide, markets remain

concerned about what will happen next month.

Trump said on Wednesday he would be willing to extend a July

8 deadline for completing trade talks, but also said he did not

believe that would be necessary, noting: "At a certain point,

we're just going to send letters out ... saying, 'This is the

deal. You can take it, or you can leave it.'"

European Union talks, in particular, look unlikely to be

concluded by then.

Elsewhere, Boeing ( BA ) shares fell 6% pre-market after news that

an Air India plane headed to London with 242 people on board

crashed minutes after taking off from India's western city of

Ahmedabad.

Be sure to check out today's column, which looks at the

weakening dollar and the debate about whether its decline is

being driven by flight from U.S. assets at large or simply

foreign investors hedging their dollar exposure.

Chart of the day

The UK may be seeing the downsides of publishing noisy

monthly GDP readouts as opposed to quarterly updates. The April

GDP report threw cold water on a relatively robust start to the

year for the UK economy, showing a surprising 0.3% contraction

during the month. However, it remains very unclear how much of

the April loss will be durable through the second quarter.

Either way, the data will put pressure on the Bank of England to

step up monetary easing. Consequently, both sterling and UK

government bond yields fell back after the GDP release.

Today's events to watch

* U.S. May producer price report (8:30 AM EDT), weekly

jobless claims (8:30 AM EDT)

* Federal Reserve issues Quarterly Financial Accounts of the

United States (11:00 AM EDT)

* U.S. Treasury auctions $22 billion of 30-year bonds

* European Central Bank Vice President Luis de Guindos and

ECB board member Isabel Schnabel both speak in Brussels

* U.S. corporate earnings: Adobe

Opinions expressed are those of the author. They do not reflect

the views of Reuters News, which, under the Trust Principles, is

committed to integrity, independence, and freedom from bias.

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