EUR/USD Flows - US CPI in focus after Fed Waller; Iran exchanges continue
Brent up at $85 now as oil market reluctantly responds to blockade, strikes in last few sessions
US CPI key, focus sharpened by Fed Waller's remarks
Stability overnight after the dollar – still very grudgingly – regained a very marginal haven edge late yesterday on the blockade move. Indeed, EUR/USD is still within a few pips ultimately of 1.14 where more options again sit today.
The pattern of exchanges continued overnight as Iran struck 2 super tankers and the US continued Iran strikes. Brent sits up at around $85 now having made the extension higher, up a further 2%.
This is the backdrop to today’s key focal point, US CPI data, that was given an extra piquancy after Fed’s Waller said the “if we get another hot reading on core inflation this week, then the FOMC will need to consider tightening monetary policy in the near term", adding that it would take "several months of lower readings to feel that inflation is finally moving in the right direction." The market now pretty much has a 25bp hike fully priced into Sep and then virtually another by turn of the year. That sets quite a high watermark in that sense for further strong upward reaction unless the data really does surprise today.