USD flows: Disquiet as fractious standoff continues
Oil creeping back higher as flare ups continue and talks remain apparently stalled
Dollar back to a slight bid albeit still within recent frozen uncertain ranges
Very much a sense of unease and disquiet about how things have been developing over the last few days as talks seem stalled and flare ups continue. The US noted several Iranian missiles were intercepted and it carried out strikes on Qeshm Island. Israel has also kept up strikes on southern Lebanon despite the partial ceasefire. Oil has continued to creep up, crude front month hitting a new bounce high of just over $96. Next up would be around $98, taking back half the recent decline, if progress does not show signs of improving. While volatility remains low and risk markets still resilient, recent events are unsettling and the dollar is back to a haven lean this morning - if well within recent tight waiting bounds.
As usual, it’s the higher beta pairs like NZD and SEK tending to lead the early swings. EUR/USD is nearer its 1.16~ support than 1.1650/70~ resistance and USD/JPY is chipping its way towards the 160~ intervention area though the MoF may be reluctant to get involved in broad dollar led action until/unless the pair is showing more independent and rapid movement.
In the background, the USTR latest section 301 findings propose 10-12% duties on 60 countries reputedly to deal with forced labour - but this more a mechanism to deal with the July 24 expiration of the 10% temporary tariff imposed after the Supreme Court struck down the original measures.