The U.S. Dollar is trading in mixed ranges against it’s G10 peers this morning as Traders become increasingly worried about the fragility of the United States’ ceasefire agreement with Iran.
Additionally, Brent and WTI are both up more than 4% this morning as shipping traffic via the Strait of Hormuz has little changed since the ceasefire was announced; shipowners are reportedly still awaiting details from Iranian officials on how to safely transit the Strait. Despite heated rhetoric from both sides suggesting that the ceasefire had been violated yesterday, the agreement does appear to have held overnight, with a significantly reduced number of attacks occurring in the region overnight. President Trump has vowed to keep troops in the Persian Gulf ahead of negotiations that are intended to cement a truce.
Domestically there is a slew of economic data due to be released at 830am, with Initial Jobless Claims and GDP being the marquee figures. Initial Jobless Claims for the week ending April 4th are expected to print at 210k, slightly above the four-week moving average of 207.75k. Annualized quarter-over-quarter GDP is expected to print at 0.7%, in line with the prior figure. Tomorrow morning will also see the release of March CPI, followed by Durable Goods Orders for February and the University of Michigan’s consumer sentiment survey for April.
What to Watch This Week…
- Monex USA Online is always open
JPY ⇓
The Japanese Yen is down against the Buck this morning amid doubts surrounding the effectiveness of the ceasefire in Iran. Traders are anticipating that the Bank of Japan will likely hike interest rates at their policy meeting this month to avoid falling behind in controlling inflation. Overnight Index Swaps currently imply a 57.4% probability of a 25bps hike.
GBP ⇑
The British Pound is up against the Greenback this morning on hopes that the ceasefire will hold. Traders are still looking for protection against large moves in Sterling, as the UK remains particularly vulnerable to energy shock and inflation was already higher in the UK than in comparative localities prior to the war. The Bank of England is unlikely to hike interest rates at their April meeting, despite the hawkish commentary in March, but Traders still expect at least one hike this year, with the highest probability currently for June at 50.4%.
