Dollar Up on Haven Demand
The U.S. Dollar has climbed against many of its major peers as safe-haven demand has surged amidst Traders weighing the impact of U.S.-Iran negotiations.
U.S. President Donald Trump rejected the Iranian proposal to reopen the Strait of Hormuz within seven days on the condition that the U.S. Naval blockade of Iranian ports was lifted. Iran has subsequently refused to soften any of their demands. Despite the rejection, officials expect negotiations to resume this week, although it is not clear if that will be conducted in person or via Qatari or Pakistani mediators. Oil prices jumped as the likelihood of an agreement being reached faded, with Brent Crude trading near $108 per barrel and WTI above $95.50 per barrel. This keeps inflation in focus, which is especially relevant with Personal Consumption Expenditure (PCE) numbers for the month of August due on Wednesday, which is the Federal Reserve’s preferred measure of inflation and a key policy input.
What to Watch This Week…
- Personal Consumption Expenditures - Wednesday 8:30 am
- Non-Farm Payrolls - Friday 8:30 am
- USA Online is always open
The complete Economic Calendar can be found here.
JPY
The Japanese Yen is up against the Dollar this morning after the Vice Finance Minister for International Affairs, Atsushi Mimura, stated that comments from Sanae Takaichi, Satsuki Katayama, and Donald Trump last week regarding the Yen’s weakness should be taken at face value, and that he is neither satisfied nor reassured by recent moves. Mimura’s statements were immediately followed by a rally in the Yen that saw it reach its best level in a week and a half, but he declined to comment on whether intervention had taken place. Traders continue to price in a further hike from the Bank of Japan before year’s end.
GBP
The British Pound is the G10’s best performer this morning after Bank of England Deputy Governor Dave Ramsden said that inflation risks have tilted to the upside and that he is prepared to hike interest rates if those upside pressures persist. This echoes hawkish statements from fellow Deputy Governors Sarah Breeden and Clare Lombardelli at the end of last week. Traders are now pricing in a nearly 90% probability of a hike at the BoE’s November meeting as a result. Chancellor of the Exchequer John Healey spoke at the Labour conference in Liverpool this morning and announced GBP 6b worth of government contracts for British shipyards and an investment of GBP 300mm into British factories by Rolls-Royce.