Buck loses value, Strait of Hormuz blockade returns

Currently, the Buck is no longer benefitting from increased bets that the Federal Reserve is ready to hike interest as a measure to combat inflationary growth. Later at 8:30AM, we will get the release of Consumer Price Index figures from June and check if odds of an increment at the September FOMC gathering can climb higher than the peak 40.0% seen in yesterday’s session. Per economists, June should have provided relief, expected at (-0.1%), from a jump in the pace of price growth between March and May. Perhaps it registers its first decline since the onset of the pandemic in 2020.

Although tensions in Iran have increased dramatically in the past couple of days, oil prices are not spiking in similar fashion. The White House announced that the blockade on Iranian ships was reinstated and there is a demand for 20.0% reimbursement for all other cargo going through the waterway. Nevertheless, this is not acting as a Dollar-positive factor. Neither was the National Federation of Independent Business’s Small Business Optimism survey for June, which came in with a higher reading than forecast. Tomorrow, we look at the suppliers’ side of inflation with Producers Price Index numbers.

What to Watch This Week…

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EUR

The Euro has been recovering some ground in the absence of major data out of the Euro-zone and in defiance of pessimism about the economic situation. One of the biggest firms in software and communications, Ericsson AB, witnessed a 10.0% drop in the value of its shares after stating that margins for its main business are under pressure this quarter. They cited the pain that has been primarily experienced in the costs of components and worries about 2027. Meanwhile, the Stoxx 600 Index slid 0.4% as media, retail, travel, and leisure shares all tumbled. May’s reading of Industrial Production is out tomorrow.

NZD

The “Kiwi” is one of the few big movers this morning, climbing by almost 1.0% and reaching its highest level over the Buck in a month. After hiking interest rates last week and following up with “hawkish” commentary, the Reserve Bank of New Zealand is looking determined to battle what they described as “sticky inflation.” Energy markets disturbed by the armed conflict in Iran will continue to more directly impact national economies of the Pacific Rim and it is clear they are ready to do as much as they can about it.