Market Overview
US Dollar Index (DXY) saw a small bounce around the 98.40 – 98.60 mark, with some support coming from lingering uncertainty over the US Iran ceasefire. Trumps just announced extension of the ceasefire brought some relief, but those second talks are at a standstill (Iran refused to show) and the strait of Hormuz is still getting pretty hairy which kept traders reaching for the safety of the dollar. The fact that higher energy prices are a risk for inflation makes markets think the Fed wont be lowering interest rates anytime soon, which in turn gives the dollar some extra support even when the market does go a bit risk-on.
The Euro remains under a lot of pressure and is stuck around 1.1700-1.1750. The latest Eurozone sentiment data came in pretty weak (that April ZEW survey went downhill fast) which doesn’t help anyones mood when it comes to growth and then there are the energy shock worries. Meanwhile the ECB is keeping their powder dry and just waiting to see what happens next, so you wont be seeing any major moves anytime soon. The Euro does get a bit of a lift when things de-escalate, but when the tensions over Hormuz start to flare again, it just can’t get any traction against the dollar.
