Spreads in the Forex market were most often razor-thin this Wednesday: the USD/yen pair unchanged (at 163.15), the USD/£ pair (the ‘cable’) unchanged at 1.3370, the euro edges up +0.1% against the $ (1.1410), the Canadian dollar gives ground (to 1.4090), as does the yuan (down at 6.7725)
Tomorrow is the ECB meeting day, and it is expected to keep its key rate unchanged.
But Christine Lagarde will not be able to ignore the +34% rebound in oil since July 2, nor its rise back toward its levels of last June 10.
Nor can she sidestep the ongoing upward pressure on energy prices, agricultural commodities and electronic components, which could justify tightening monetary policy as soon as the September back-to-school period.
Unsurprisingly, and with no ‘macro’ data scheduled on the calendar, the geopolitical situation was also the top concern for currency traders, but after 10 days of reciprocal bombings, they seem immune to any emotion on the matter.
The real surprise comes from silver’s spectacular rebound toward $60 (or +8%) since Monday, even as the greenback looks resilient and yields are everywhere at their peak.
No sign of a lull is emerging on the geopolitical front: the Revolutionary Guards claim attacks on US air bases in Jordan, and the Bahraini army said it had repelled ‘several Iranian attacks’.
An Iranian media outlet also reported a US strike on Larak Island, in the Strait of Hormuz.
Donald Trump on Wednesday reiterated his threats against Iran.
The US president said the United States ‘will bomb and destroy a bridge or a power plant’ whenever Tehran goes after a ship in the Strait of Hormuz.
As the United States bombed Iran for the 11th consecutive night, Donald Trump said the United States was ‘not finished’ with Iran, asserting that a new operation could target a secret underground nuclear complex located in Mount Kolang.
A US strike, the first of its kind, targeted last night the civilian reactor at Bushehr on Iran’s west coast.
In response, Iran’s armed forces command, Khatam al-Anbiya, warned that any attack on this site would trigger retaliation against US interests as well as those of their allies in the Middle East.
Separately, the White House occupant warned that the United States would respond militarily if Yemen’s Houthi rebels, backed by Iran, tried to disrupt or block maritime traffic in the Red Sea… which they are already doing by forcing Saudi oil tankers to give up using the Bab El Mandeb Strait.
Tomorrow is the ECB meeting day, and it is expected to keep its key rate unchanged, but Christine Lagarde will not be able to ignore the +34% rebound in oil since July 2, nor its rise back toward its levels of last June 10: she will not surprise markets by arguing that ongoing upward pressure on energy prices, agricultural commodities and electronic components could
