EUR/USD flows: Mkt glass half full; ECB in focus with high bar
Oil off the lows, mkt if anything relieved that didn't escalate even more
Stocks still managing to hold the lows at present
ECB in focus, a lot already priced in to validate
Further military exchanges although that had been telegraphed yesterday and the glass half full read was that at least the US did not escalate dramatically further by targeting infrastructure - instead sticking to ‘military surveillance, communication systems, and air defences sites’ although Iran accused the US of striking reservoirs.
Maybe the bigger concern though is that the idea of trying to bolster the diplomatic position (‘negotiate with bombs’) has the potential to aggravate rather than speed agreement.
Oil backs off the overnight highs and is sitting around +$1, mid 85-95 range on Nymex front month so still very contained.
S&P future is also off the marginal new low for the correction and slightly up on the day, while Nasdaq has still held the spike low from earlier in the week and up over ½ % so still holding in. All in all that least FX consolidating with just minor upticks for higher beta trades versus the dollar.
Focus today very much on the ECB of course. Here given what is already priced into the curve, the ECB has a fair amount to do to just validate that. In other words, there's perhaps more of a skew to 'sell the fact', and quite a high bar for it to surprise more hawkish than expected.