The conflict in the Middle East is intensifying. The market appears to be indifferent to the announcement regarding the release of strategic oil reserves. The announcement lacks specifics regarding the pace and composition. Furthermore, the markets’ comprehension of the disruption extends well beyond oil, encompassing gas, fertilizer, sulfur, and urea. Compounding the geo-economic complexities, late yesterday, the US revealed it was initiating trade investigations (under Section 301 of the Trade Act) involving approximately 16 countries, including China, the EU, Mexico, Japan, South Korea, Taiwan, Switzerland, Norway, and various others in East Asia. The US dollar exhibits a generally stronger position. Equities are experiencing a decline, while interest rates are predominantly on the rise. April WTI has surpassed the high recorded yesterday, and May Brent has followed suit. Gold and silver are consolidating but slightly firmer.
The euro experienced a downward trend in both Europe and North America yesterday. The price peaked at approximately $1.1560, with earlier selling pressure driving it down to around $1.1530. The four-month low established on Monday was marginally above $1.1505. It retraced to the previous day’s low in Europe but encountered resistance. The technical tone lacks strength, and while the momentum indicators are extended, they do not seem ready to reverse upward. The dollar experienced a minor pause just below JPY159 in North America yesterday and has since climbed to nearly JPY159.25 today. The January 23 high (~JPY159.25) was maintained when the Fed allegedly monitored prices for the US Treasury. The dollar dipped to session lows just before JPY158.65 in Europe, where it seems to be attracting buyers. Sterling fell beneath $1.34 during the North American session yesterday; however, this movement did not trigger additional selling pressure.
The asset remained in a tight range during the New York afternoon, hovering below $1.3415, before experiencing a decline to approximately $1.3360 in the Asia Pacific session today. The price has reverted to the $1.3400 region in Europe, yet it appears to be losing momentum. Options for nearly GBP500 at $1.3375 are set to expire today. Sterling has shown stronger performance compared to the euro since the onset of the war, with a notable shift in policy expectations. The euro reached a two-month peak close to GBP0.8800 at the conclusion of February, subsequently declining to nearly GBP0.8620 yesterday, a level that has remained stable thus far today. A six-month low was observed in early February, just beneath GBP0.8615.
The US dollar briefly surpassed CAD1.36 yesterday, surpassing Tuesday’s high; however, the overall consolidative tone persists. The currency approached the CAD1.36 mark today, but after dipping to nearly CAD1.3575, it attracted fresh buying interest. The greenback stayed under the week’s peak established on Monday, just beneath CAD1.3610, where options totaling nearly $400 million are set to expire today. A breach of CAD1.3615 could trigger short-term advances towards CAD1.3640-50. Following a peak near $0.7190, marking a slight new session high in North America and its strongest position since mid-2022, the Australian dollar stabilized around the midpoint of the day’s range. It has paused today and is currently consolidating within the range of approximately $0.7110 to $0.7160.