The U.S. Dollar is on recovery mode this morning after falling to its weakest level overall in three years by jumping by over half a percent on average against most currency pairs.
Overview
Throughout overnight trading sessions, traders and investors had to cope with news of Israel attacking Iranian nuclear and military facilities, which only aided in exacerbating fears over prolonged armed conflict spreading across the Middle East.
The impact was immediate with oil prices jumping as Brent Crude climbed by 7.6%, even as high as 13.0% at one point marking its biggest intraday upward move since March 2022. The price of gold also rose by 1.0%, establishing its role this year as a go-to safe-haven asset. Equities are awaiting some pain with S&P 500 futures already down by about a percent. As markets continue to react, Israel has stated that it will continue operations for as many days as needed to eliminate the threat. Iran has vowed to retaliate.
With war helping make energy costs chaotic, central bankers will need to account for this new inflationary pressure, which could affect ongoing strategies to expand or contract the money supply. This adds to other headaches making long-term plans difficult for business expenditures. We will get a reading of how consumers feel as the University of Michigan Consumer Sentiment survey comes out at 10AM. For now, something else is overshadowing concerns surrounding tariffs.
What to Watch This Week…
The complete Economic Calendar can be found here.
EUR ⇓
The Euro is trading lower after having rallied yesterday to its strongest point since 2021. Indicators are starting to show that the Euro-zone is struggling to find growth with a few contractions in recent data points. April’s Industrial Production lost all that was gained in March with a (-2.4%) drop. Only a (-1.7%) was estimated while the yearly average came down from 1.2% to under 1.0% at 0.8%. With trouble brewing everywhere, European leadership have to concern themselves with stagnation and the European Central Bank about balancing worries over prices increasing again like during the pandemic.
MXN ⇓
The Mexican Peso is losing steam after jumping to its strongest point since mid-summer of 2024. Oil price improving has not aided MXN and worries over trade globally are making the Buck seem attractive as a source of safety. We are at the mercy of headlines and developments on how things could possibly escalate so volatility will remain high as we close out a rough week blurring out the future.
