Dollar Mixed on Latest Iran Conflict
The U.S. Dollar is trading in mixed ranges after the United States conducted a ninth consecutive day of bombing operations in Iran, as the U.S.-Iran interim peace deal has been all but abandoned and the death toll continues to rise.
U.S. strikes targeted military and communications infrastructure in an effort to stop Iranian attacks on commercial shipping and force a reopening of the Strait of Hormuz. Iranian forces responded with attacks on U.S. bases in Kuwait, Jordan, Bahrain, and Iraq. Renewed hostilities show little sign of easing and have brought traffic in the Strait to a standstill as a result, driving crude oil prices to their highest level in five weeks. Those gains have since eased on reports that Iran has been contacted by mediators Qatar and Pakistan in an attempt to restart diplomatic efforts.
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EUR
The Euro is down against the Buck this morning as elevated energy prices drag on the common currency. Data out of Germany also showed that Producer Price Index (PPI) numbers fell by slightly more than expected in the month of June. While Traders are not expecting the European Central Bank to hike interest rates at their meeting later this week, about 44 bps of tightening has been priced in for the remainder of the year.
GBP
The British Pound is up against the Greenback this morning as Andy Burnham officially succeeds Keir Starmer to become Prime Minister of the United Kingdom. Traders are now focused on Burnham’s cabinet appointments and the direction of his fiscal policy. Special attention is being given to the appointment of Chancellor of the Exchequer, head of His Majesty’s Treasury, with Rachel Reeves set to be ousted and expected to be replaced by Shabana Mahmood later today, although Ed Miliband remains in contention. The Autumn Budget, typically released in November, will provide more clarity on the direction of Burnham’s fiscal policy, with Sterling’s price action likely to be driven by more tangible factors such as economic growth in the meantime.