On Friday (June 5), the future of the ceasefire agreement in Lebanon remained uncertain. The market had been jubilant the day before due to the agreement between Israel and Lebanon, which was originally seen as a key prerequisite for Iran and the United States to reach a consensus in negotiations. However, Hezbollah's rejection of the relevant clauses has cast a shadow over the prospects of the ceasefire.



Hezbollah, backed by Iran, stated that it had not participated in the US-mediated negotiations led by the Lebanese and Israeli governments, and proposed a ceasefire precondition of a complete Israeli military withdrawal from southern Lebanon. Meanwhile, Israel continues its airstrikes against targets within Lebanon, and drone attacks have resumed in the Persian Gulf region, with the latest target being the oil terminal at the port of Fahre in Oman.

The sudden turn of events dashed Trump's earlier optimism—the US had hoped to finalize an agreement with Iran by the end of the week, but the likelihood of it being implemented is now highly questionable. Despite the setback in geopolitical negotiations, the overall sentiment in the commodities market remained stable, with investors not worried about a rapid and widespread escalation of conflict in the Middle East. The market generally believes that the Trump administration has no intention of engaging in another large-scale war with Iran, and even if negotiations drag on, risk premiums are unlikely to continue to surge.

In the crude oil market, both WTI and Brent crude oil prices have been fluctuating and declining since yesterday, gradually giving back the gains made earlier this week. Traders are focusing more on the positive news that "diplomatic negotiations are still underway and there is no large-scale conflict in sight," thus mitigating the negative impact of the breakdown in US-Iran negotiations.

Even with a pullback, US crude oil is still expected to rise by 6% this week, while Brent crude oil is locked in a 3% weekly gain. US employment data adds further uncertainty, causing the dollar to rise and then fall. The dollar's movements in recent days have been highly correlated with oil prices: a significant strengthening at the beginning of the week, followed by a gradual pullback in the middle. Besides geopolitical tensions, expectations regarding the Federal Reserve's monetary policy are another core factor driving the dollar's performance. Following a series of strong US economic data releases, yesterday's economic indicators generally fell short of expectations.

U.S. initial jobless claims and Challenger job cuts data for May both rose, indicating renewed weakness in the labor market. San Francisco Fed President Daly adopted a dovish stance, stating that the Fed needs to be prepared to adjust interest rates in both directions and retains the option of rate cuts. Conversely, Kansas City Fed President Schmid's rhetoric was hawkish, suggesting that the Fed's next policy move could still be a rate hike.

Amidst the interplay of bullish and bearish opinions, market pricing in a December Fed rate hike has slightly declined to around 15 basis points, with US Treasury yields falling in tandem, further weakening the dollar. The yen awaits the US May non-farm payroll data to test the Bank of Japan's potential intervention in the exchange rate, limiting the upside potential of the USD/JPY pair, which is also one of the contributing factors to the dollar's temporary weakness.

On Wednesday, the USD/JPY exchange rate initially climbed steadily, approaching the 160 mark, before experiencing several rapid drops, with market signals pointing directly to foreign exchange intervention by the Bank of Japan. Furthermore, hawkish comments and verbal intervention guidance from Bank of Japan officials also helped stabilize the yen. Coupled with better-than-expected Japanese wage data today, the market is almost certain that Japan will raise interest rates in June. However, due to continued uncertainty surrounding the Bank of Japan's policy stance, the probability of a rate hike remains at 80%, and the yen continues to face downward pressure.

Tonight's US May non-farm payroll report will be a key test for the yen's future performance: the data is likely to fall short of expectations, but if it is significantly better and boosts the dollar, Japanese regulators may intervene again to stabilize the yen, even with intervention already taken this week. The AI sector plunged, and risk aversion intensified in US stocks ahead of the non-farm payroll report, with negative news from Middle East negotiations weighing on market risk appetite; however, AI concept stocks have already experienced two weeks of continuous gains, and a profit-taking correction is warranted.

The Nasdaq Composite Index closed lower for the second consecutive trading day on Thursday, as funds rotated from the AI sector to traditional blue chips, leading the S&P 500 and Dow Jones Industrial Average to buck the trend and close higher. European stock indices remained range-bound, dragged down by Broadcom's weaker-than-expected earnings guidance, with chip stocks leading the decline in Japanese and South Korean markets, causing the indices to continue their downward trend.