The U.S. Dollar is trading in mostly familiar ranges, tilting higher against most currencies as markets continue to navigate the immediate effects of trouble in the Middle East.
As mentioned yesterday, trade concerns are affecting the globe with the Strait of Hormuz becoming a focal point in the war as oil shipments have been stuck and a tanker was attacked.
Despite the bad headlines, global stock exchanges saw a return to appetite with some taking as truthful the likelihood that Iran will reach out for a diplomatic resolution to cease the chaos. Across the manufacturing hubs of Asia, financial experts are warning that everything from semiconductors to clothing will be impacted and inflation is expected to hit. Energy costs and gas at the pump already have risen. Bitcoin and gold are trading at higher prices as well.
We will get key data in the form of Non-Farm Payrolls tomorrow. After the release of the Fed’s Beige Book, bets for further cuts by the Fed continued to decrease with officials pointing at a resilient economy that needs no stimulus. Labor data may further improve the case for a stronger U.S. Dollar going forward.
What to Watch This Week…
- Euro-zone GDP, Friday
- US Nonfarm Payrolls, Friday 8:30AM
- Monex USA Online is always open
EUR ⇓
The Euro is slightly down as the Buck improved against G-10 peers as the conflict in the middle East makes for a worrisome outlook if no end is in near sight. European leadership is currently worried about facing another energy squeeze similar to the one experienced four years ago as the Russia-Ukraine War began. Crude oil is already up 10.0% from last week and at the highest levels in over a year. Meanwhile, natural gas futures are up by over 50.0% from last Friday. After Producer Price Index indicated suppliers are already facing higher costs, there is no telling how overall prices will rise and affect demand.
JPY ⇓
The Japanese Yen lost a bit of ground as economies across the Pacific Rim worry about the Iranian situation with more than just oil on the line. Materials and shipping naturally cost more during oil jumps, but there are other raw materials that may become less available if trade is not normalized. The Yen may face some challenges, but its value could be sustained as banks increase their bets on the Bank of Japan raising interest rates. For now, everyday is a waiting game for developments that bring about peace.
