FundaFX wrap: Dollar jumps through hoops despite Iran noise/higher oil
FundaFX today was focused on the aftermath of Trump's projected decision to axe the Iran nuclear deal, while perhaps leaving the door open for some negotiations to take place during this 90-180 day grace period before full economic sanctions kick in.
The dollar caught a bid and risk bounced as markets digested the news as somewhat old news simmering away that just needed to be brought to a full boil. The DXY ran up to a fresh trend high of 93.41 before drifting back to trade around 93.10 for the best part of the US session.
Oil and the dollar have been doing something that has only occurred 11 times since 1983 - both are rallying and the correlation have been sustained since April and shows little sign of breaking down.
Meanwhile, the following have been the key headlines regarding Iran/ oil and N.Korea:
- Trump says if Iran starts the nuclear program there will be “very severe consequences”
- Iran has drawn up a plan proportional to America's withdrawal from the nuclear deal- Iran government spokesman
- France's macron told Iran president Rouhani in phone call that France wants to keep nuclear accord alive - French presidency
- U.S. President trump said Pompeo and N. Korea's Kim Jong-un had very productive talks -s.Korea presidential office
- Iraq oil minister Luaibi says OPEC to discuss possible shortfall in output on the back of trump decision to withdraw from Iran nuclear deal
- Saudi energy minister: in close contact with OPEC's presidency, Russia and the US and will contact other producers and major consumers over next few days to ensure market stability
- IEA, commenting on new u.S. Sanctions against Iran, says stands ready to act if necessary to ensure oil markets remain well supplied
WTI and DXY breaking the rules, investors wait to see if correlation can last
Meanwhile, as far as Central Banks went today:
- RBNZ leaves interest rate unchanged at 1.75%, inflation expected to remain below 2%
- Fed’s Bostic: uncertainty caused by trade negotiations carry a cost
- ECB's lane says too early to tell whether a slowdown in demand is hitting the European economy