Market Highlight 01.06.2026

China’s manufacturing activity slowed in May due to disruptions from the five-day holiday, combined with pressure on global demand and rising input costs caused by the ongoing conflict in the Middle East. The manufacturing PMI fell to 50 from 50,3 in April. The Chinese economy is showing signs of weakening after strong growth in Q1/2026. The broad-based slowdown in April, with industrial production and retail sales posting their weakest growth in years, has led economists to call for stronger policy support.

The USD weakened against other major currencies on Friday and recorded a weekly decline of 0,4% after reports indicated that the U.S and Iran had reached an agreement to extend the ceasefire and ease restrictions on cargo flows through the Strait of Hormuz. The proposed agreement would extend the ceasefire by a further 60 days and allow traffic to resume through the strategic waterway while negotiators work through contentious issues, including Iran’s nuclear program. The USD had initially strengthened sharply when the conflict began, supported by safe-haven demand and by the relatively limited impact of energy-driven inflation on the U.S economy. Since then, however, the USD has gradually weakened as uncertainty surrounding the trajectory of the Iran conflict has weighed on market sentiment. Data released last Thursday showed that U.S inflation in April rose at the fastest pace in three years, driven by higher energy prices, reinforcing expectations that the FED will keep interest rates elevated until next year.

Domestically, interbank USD/VND closed last Friday at 26.300, equivalent to a decline of around VND 50 over the past week.

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