North American Summary and Highlights 7 Apr
Overview - The USD was weaker as markets doubted whether Trump would follow through on extreme threats against Iran, with a Pakistani cease fire proposal raising hopes near the close.
North American session
Trump’s rhetoric reached fresh extremes, threatening that Iranian civilization could die tonight, never to be brought back again. This caused some pressure on equity markets, but not an extreme reaction, suggesting most expect the threat not to be carried out, with some looking for a TACO trade. The USD was marginally softer through most of the session, and a late Pakistani proposal for a two week cease fire saw USD losses extended.
USD/JPY, after finding support at 159.50 ahead of Trump’s remarks later met resistance at 160, before slipping to 159.60 on the Pakistani proposal. The commodity currencies were firmer, AUD/USD rising to .6970 from .6915 and USD/CAD slipping to 1.3890 from 1.3925. EUR/USD also made gains, to 1.16 from a little below 1.1550. EUR/GBP made marginal gains while EUR/CHF picked up to .9250 from .9210.
February durable goods orders with a 1.4% decline, but a 0.8% rise ex transport, were in line with expectations. Fed’s Williams suggested the war would have only a marginal impact on core inflation.