Trying to make sense of today’s price action was just a headache – and this resumes the latest Market action fairly well.
If you were only looking at Oil and the US Dollar, things were at least a bit coherent. After closing at $98 last Friday, Crude opened with a scary gap higher to $102, but has since retracted below $95.
Naturally, the Petrodollar followed suit, tumbling 1% on average against most of its FX counterparts. Antipodean currencies loved it the most, with the Kiwi Dollar bouncing after a rough first half of the Month, along with the Aussie Dollar.
The reasoning for this is that signs of life in the Strait of Hormuz have emerged, with Iran still leveraging its influence in the most significant region in recent days.
A Pakistani tanker crossed the Strait overnight, as the Pakistani government condemned the ongoing American attacks against the Iranian regime.
But that wasn’t the only tanker crossing, with two Indian LNG ships making their way between the small Hormuz and Larak Kuhi islands, seemingly avoiding the larger Strait.
This, along with an Axios report revealing that communications between Washington and Iran have reopened, helped to soothe Market sentiment.
Global Equities have all appreciated in a cautious rebound, but the fact that they did not close at their session highs indicates that the path ahead remains uncertain.
What is for sure is that Metals are now facing a mix of headwinds, including a seemingly worsening Iran conflict, inflationary fears, and general positioning ahead of this week’s huge Central Bank calendar.
To learn more about what’s coming up this week, go check out our Weekly Markets outlook.
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