EUR/USD, USD/JPY, EUR/GBP flows: W/e worries stemmed on progress, dollar remains firm
Reported progress in high level talks helps stem w/e escalation worries
Dollar retains its firmer lean since break higher
Asia recoups on risk sentiment after progress made on Iran talks in Switzerland - Nikkei and Kospi finishing in the plus, Nasdaq back to -0.2%, and Brent reversing to be off -$1.5.
News flow is bound to stay mixed and the underlying tensions are real but developments are a clear improvement on the weekend, with the statement saying they had agreed a mechanism to end fighting in Lebanon and opened a communication line to help ship passage in the Strait. Dollar generally remains supported still after recent breaks higher. Cable also a little off, though generally sitting in the pack with no real additional impact seen from suggestions that PM Starmer had considered position and might be ready to lay out departure (very much expected).
Fresh jawboning out of Japan meanwhile while BoJ dep. Himino sticks to a hawkish spin (Middle East easing doesn’t change BoJ outlook, passthrough to downstream goods pricing progressing).With the firmer dollar, the pair back to 10-20 ticks of the highs with still a game of chicken on play until any eventual MoF intervention. General dollar strength continues to be an obstacle to action though and at the moment the threat is only stalling the upside.