Dollar Slips as Oil Cools
The U.S. Dollar is trading in mixed ranges but remains on track for a second consecutive weekly gain, its longest winning streak since June.
Weakness in the Buck is being primarily driven by a cooling of oil prices following reports that negotiators from the United States and Iran are exploring a deal that would see the Strait of Hormuz reopened and the U.S. Naval blockade of Iranian ports lifted in a phased approach. A deal of this nature would be reminiscent of the memorandum of understanding that was agreed to in the middle of June, just a few weeks before the ceasefire collapsed. Brent Crude is trading around $105 per barrel, and WTI under $92.50 per barrel. This cooling of oil prices has also resulted in a tentative stabilization of the U.S. Treasury markets. Preliminary Durable Goods Orders for the month of August are due at 8:30am, and the University of Michigan’s final Consumer Sentiment survey for the month of September is due at 10am.
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JPY
The Japanese Yen is the G10’s best performer this morning after Japanese Finance Minister Satsuki Katayama revealed that U.S. President Donald Trump expressed concerns with regard to the Yen’s weakness to Japanese Prime Minister Sanae Takaichi on the sidelines of the United Nations General Assembly in New York earlier this week. Takaichi herself confirmed as much and stated that she agreed that an undervalued Yen was problematic but added that fiscal and monetary policy were not part of the discussion. Katayama would go on to state that she will not hesitate to take bold action on the Yen, which has increased speculation amongst Traders regarding potential intervention action.
GBP
The British Pound is up against the Dollar this morning following a hawkish shift in rhetoric from Bank of England Governor Andrew Bailey. Bailey stated in a speech at Oxford early this morning that it is getting harder to maintain the stance that the BoE should keep rates on hold at 3.75% and that by the time conclusive evidence of second-round effects of the pass-through on energy prices are determined, it may already be too late to act. This suggests that the BoE may need to hike interest rates pre-emptively to keep inflation under control. Monetary Policy Committee members Sarah Breeden and Clare Lombardelli conveyed similar opinions in speeches given yesterday. Traders are now anticipating a hike in November.