EUR/USD, USD/JPY Flows: Oil, UST, dollar, all on edge
More wires comments leaving the market on edge over rhetorical exchanges and practical problems with deal
Oil, USTs, dollar also see a pop
Market’s confidence starting to wobble as wire reports focus on frictions and obstacles. Fars News is quoted as suggesting Parliamentary Committee reviewing a preliminary bill to ban US, Israel and other hostile vessels. Reuters also picking up on shipping industry concerns that they currently face a catch 22 of being barred from making payments to the Iran Strait authority and also potentially forfeiting insurance if they do pay for Iran ‘passage insurance’ tolls fees. Still a mess of a situation therefore with rhetorical jostling that may be noise, but always leaves talks on a knife edge of imploding, as well as real issues to be cleared, even if the US ends up accepting the defeat on free passage.
Net result is oil back up around $3 and US yields popping higher, 2s up around 6bp. As well as supply, upward pressure also somewhat aggravated by the FT report today suggesting people familiar with his thinking suggesting Warsh is prepared to hike rates in Sep if inflation continues to run hot.
Along with technicals, the combination is tending to squeeze the dollar a little higher today, USD/JPY seeing a bit of a pop after clearing 158, back to 158 ½.