Asia Summary and Highlights 13 Mar
Iran says it will not close Strait of Hormuz but asserts right to secure waterway
Asia Session
Iran says it will not close Strait of Hormuz but asserts right to secure waterway, adding to earlier comments of not closing the Strait. While it is a sign of de-escalation, Iran will likely continue leverage the chokepoint to seek chips on the table. Oil is still marginally higher with calmer equities and metal. AUD/USD is trading 0.20% lower at 0.7061, NZD/USD is trading 0.45% lower at 0.5827 while USD/CAD rises 0.06%.
USD/JPY continue its rally on stronger USD amid geopolitical uncertainty. As the pair quickly approaches 160 figure, verbal intervention surfaces expectedly. Japan Finance Minister Katayama signaled readiness to act in foreign exchange markets if necessary, a classic rhetoric of jawboning. USD/JPY is still trading 0.07% higher at 159.42. Else, EUR/USD and GBP/USD are down 0.09%
European and North American sessions
While the USD saw a modest dip in the European morning, it rebounded in North America with Middle East tensions escalating, with oil also firmer. The most significant comments came from Iran’s Khamenei who stated that the Strait of Hormuz would remain closed. Comments from Trump that stopping Iran was more important than high oil prices also suggested no imminent end to the war.
USD/JPY rallied to 159.40, more than fully erasing a dip to 158.57, while EUR/USD fell to 1.1515, more than fully erasing earlier gains to 1.1575. EUR/GBP was little changed but EUR/CHF advanced to .9045 from .9025. USD/CAD rose to 1.3625 from 1.3585 while AUD/USD fell .7080 from .7140.
US data was on the firm side, most notably a fall in January’s trade deficit to $54.5bn from $72.9bn, led by firmer exports. Initial claims remain low at 213k from 214k. January housing starts rose by 7.2% while permits fell by 5.4%, but the single family sector saw modest losses in both series.