EUR/USD, EUR/GBP Flows - Chilli yesterday, TACO today?
Familiar de-escalation comments follow yesterday's outburst and fresh exchanges. Mkt left waiting to hear from Iran
Fed Minutes highlight two scenarios and rate paths ahead. Iran and tech demand remain highly relevant
EUR/GBP meanwhile inching out the lows
Slightly sense of false calm with oil trimming back almost $1 and still pretty sanguine about recent events. Trump’s latest is that Iran called and wants to make a deal though the market has got used to taking these familiar comments with a bucket of salt too. For now, a sign that Trump again wants to de-escalate and it’s wait and see on what Iran’s next comments are.
The dollar has given some ground though EUR/USD still holds its recent 1.1450~ area range topside in further tight consolidation and with options in the area over the remainder of this week. Some rebound in tech stocks too also giving a slightly more positive net risk tone on the morning.
FOMC Minutes last night also avoided any great shocks, with the central focus more of a two-way contingent outlook and fence sitting rather than a majority tightening bias, though the text did underscore the key relevance of both the Iran war and tech driven demand on the path ahead.
EUR/GBP meanwhile continues to inch out the lows as extreme sterling positions still evident in the latest spec data continue to be caught short with a slow-motion squeeze. The Farage pantomime is if anything helpful to further diffuse the political negative narrative that had helped drive the heavy bets rather than add to it.