Dollar Resumes Advance, Strikes Delayed

Good morning, the U.S. Dollar is up to start the day, erasing yesterday’s losses. President Donald Trump stated that he has delayed a novel bombardment of Iran for ‘two or three days’ following requests from Saudi Arabia, Qatar, the United Arab Emirates, and other Persian Gulf allies, who believe they are very close to making a deal with Iran. President Trump went on to say that if our allies in the region could reach a deal that satisfied them, and which guaranteed that Iran would not obtain a nuclear weapon, then the U.S. would ‘probably’ be satisfied as well. This followed an earlier report that both sides had rejected the latest proposals, with the White House seeking commitments on the surrender of enriched uranium and the suspension of further enrichment, and Tehran being unwilling to end the war at the expense of its nuclear program and seeking reparations. President Trump has repeatedly warned that failing to make a deal would result in the resumption of military action by the U.S., but has thus far not followed through.

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GBP ⇓

The British Pound is down against the Buck this morning after data out of the U.K. showed that employers cut 100k jobs in April, the most since the start of the pandemic. There has been a sharp deterioration in the labor market as the energy shock caused by the war in Iran hits U.K. businesses particularly hard. More than 140k jobs have been lost in the last three months, with the unemployment rate spiking a half percent over the last month. The data puts the spotlight back on Prime Minister Keir Starmer after his Labour government was blamed for job cuts last year. Starmer is expected to face a challenge from Manchester Mayor Andy Burnham in the coming months, who has ruled out loosening fiscal policy if he were to gain power.

AUD ⇓

The Australian Dollar is down against the Greenback this morning, near a three-week low, after Reserve Bank of Australia Assistant Governor Sarah Hunter warned that a sharper economic slowdown may be required to get inflation expectations back under control should they continue to rise. She stressed that expectations needed to be anchored around the inflation target, which the RBA has set at 2-3%. These comments follow a survey from Westpac Banking Corp. and the Melbourne Institute of Applied Economic and Social Research which showed that Australian consumers remain deeply pessimistic amid elevated inflation and high borrowing costs.