Buck in tight ranges, Fed tomorrow, Deal signing Friday

Even equities that have been on the rise recently hit the brakes following a three-day rally for U.S. stock exchanges. Meanwhile, oil prices made a turnaround since the breakthrough in negotiations was reported, marking the longest run of losses for West Texas Intermediate after it fell 3.0% to $78.0/barrel. Since the details behind an agreement between the U.S. and Iran, traders are watching traffic out of the Strait of Hormuz to see if indeed relief will come to energy markets long-term.

Without much ahead of tomorrow’s main event other than May Housing starts, which will be out at 8:30AM, statements or backing away from a ceasefire for any reason could turn the tide and improve the Buck as fear takes a hold of markets once again. For now, there is optimism that the worst may have passed as even Qatar is planning on quickly boosting its liquefied natural gas production. We shall see if the gap is filled with any turbulence, but currently things are relatively quiet.

AUD

The Australian dollar is also showing little movement following the Reserve Bank of Australia’s policy announcement, which struck a somewhat hawkish tone. RBA officials chose to hold rates steady, but warned that they remain more concerned about inflationary pressures than markets may have expected. While weak economic growth—with first-quarter GDP rising just 0.3%—likely influenced the decision to leave borrowing costs unchanged, higher energy prices are prompting policymakers to reassess whether the current 4.35% rate remains appropriate.

JPY

The Japanese yen has not moved significantly even after the Bank of Japan followed through on its promise to raise its benchmark interest rate. At 1.0%, this marks the highest interest rate since 1995. In the vote, members backed the increase 7–1, signaling near-unanimous agreement as inflationary pressures convinced policymakers to act despite stagnant economic productivity and uncertainty stemming from ongoing conflict. Deputy Governor Shinichi Uchida also said that the BOJ would stop reducing its bond purchases, thereby removing another layer of stimulus. The yen’s value has not yet been affected, but we will see whether the Fed’s conference moves the needle.