The U.S. Dollar is trading in mixed ranges against its G10 peers following a statement from President Trump late yesterday afternoon indicating that the war in Iran could be over “very soon.”
The headline resulted in an immediate cooling of oil prices, which had surged to nearly $120/barrel earlier in the day – oil is sitting around $90.0/barrel this morning. The Dollar followed oil back down on the news as Traders looked to ditch the safe havens that they crowded into over the last week. Despite Trump’s comments, Iran itself has given little to no conspicuous indication that they are seeking a truce, and Secretary of War Pete Hegseth has stated that the U.S. won’t end the conflict until the enemy is defeated, which poses the question of if the turnaround in asset prices is a bit extreme and/or premature.
What to Watch This Week…
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AUD ⇑
The Australian Dollar is the G10’s biggest gainer against the Greenback this morning following a pessimistic consumer confidence release and commentary from Reserve Bank of Australia officials indicating that a rate hike is still on the table for this month. Recent data has shown a firm Australian economy, with easing unit labor costs, and that should offer some relief for policymakers, but the RBA was the first major monetary authority to tighten policy this year, and the futures market has priced in a 63.8% chance that they hike rates a further 25bps at their March 17th meeting.
EUR ⇓
The Euro is down against the Buck this morning as energy price concerns continue to dominate Europe. After gaining on Trump’s comments yesterday, the Euro is retracing on Hegseths comments this morning to be little changed from yesterday’s close. The European Central Bank has acknowledged that the likelihood of the next policy move being a rate hike has risen in the past couple of weeks, but Traders are no longer pricing in a full 25 bps hike before the end of the year. ECB officials continue to emphasize the need for caution in their policymaking and have indicated that they need to assess the impact of recent energy price changes before reacting.
