EUR/USD, USD/JPY flows - Lower Oil Prices and the USD
Oil prices are lower, which is helping U.S. Treasury yields. Worth watch as more could see the USD soft into the 2nd half of the week.
Today oil price decline has been triggered by the WSJ report that crude oil flows through the Straits of Hormuz last week reached 76% of pre-war levels (though much lower for diesel), which suggests that Iran is becoming ineffective in slowing shipping. 10yr UST are 5bps lower, partially on lower oil prices but also Fed Williams leaning against an October Fed hike. If U.S. Treasury yields decline further it could be catalyst for a USD drift lower in a quiet data week. Given the light data schedule, oil prices rather than economic data could be the swing factor UST and the USD into mid week. This would likely only be small however, given that gasoline and diesel prices are the key for U.S. CPI rather than crude oil prices.
