Dollar Mixed as Diplomacy Falters

Overnight, U.S. forces reportedly struck a military installation near the city of Tabriz, in the north-west of Iran, and the western cities of Abdanan and Chovar, near the border with Iraq. The enhanced scope of the latest U.S. attacks forced the Iranian capital of Tehran to take precautionary measures and activate their air defense systems. Iran responded by, again, striking U.S. military bases in Kuwait, Bahrain, and Jordan. Leadership from both sides has indicated that a fresh ceasefire and return to diplomatic negotiation is unlikely in the immediate future. Oil prices have surged to a six-week high as supply concerns continue to filter through.

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GBP

The British Pound is down against the Greenback this morning following the release of Consumer Price Index (CPI) numbers for the month of June where the year-over-year figure came in softer than anticipated and at its lowest level in 15 months. Some of the other figures did admittedly come in higher than expectations, namely core and services, but the headline figure being soft is reinforcing the idea that the Bank of England should keep interest rates on hold at their policy meeting next week. Traders are currently only assigning a probability of approximately 4% that the BoE will hike rates next week, but are continuing to price in at least one hike before year’s end.

JPY

The Japanese Yen is up against the Buck this morning after Bank of Japan officials stated that they are open to raising interest rates at a faster pace than the once every six months that has been anticipated. This is seen as a positive signal for the Yen as many Traders are of the opinion that the BoJ has fallen behind the curve and needs to play “catch-up” to have any hope of halting the Yen’s slide. The BoJ is widely expected to keep interest rates on hold at their July meeting, after raising the benchmark rate to its highest level in more than 30 years last month, but Traders are expecting a hike by year end. This latest statement from the BoJ has pushed the probability of that hike coming in October over 80%.