North American Summary and Highlights 18 May
Overview - The USD was slightly softer with mixed headlines on Trump’s intentions regarding Iran causing some volatility.
North American session
The USD gyrated on conflicting headlines over Trump’s intentions towards Iran. Early losses were seen on talk that Trump might allow a temporary waiver of sanctions on Iran before a recovery as Trump said he was not open to offering Iran concessions. A late slide came as Trump stated he was persuaded by Qatar, Saudi Arabia and the UAE not to launch an attack on Iran scheduled for tomorrow, though he has instructed the military to be prepared to launch such an attack if a deal is not reached.
Trump’s late comments means that a USD/JPY move above 159 was not sustained. EUR/USD was marginally firmer around 1.1650. EUR/GBP extended losses to .8680 from .87 as GBP/USD moved above 1.34. Movements in AUD/USD and USD/CAD were modest.
May’s NAHB Homebuilders’ index was stronger than expected, rebounding to 37 from April’s weaker 34.
European session
Consolidation of Friday’s moves, with EUR/USD seeing modest bounce after o/s test of 1.16, and similar breathers across most other pairs, cable +0.3% on the day. AUD/USD also lifting off the overnight extension to just shy of 0.71. DXY also trims a touch after a week of gains, though not breaking the uptrend. Risk markets also having some consolidative respite on the morning, copper trimming losses, Dax holding just above flat - though Asia regionals remained still soft overnight and BRL for example is the latest pair to see a bit of a correction.
Not much new on the UK politics front, as the wheels are largely in motion now. Deputy PM says Starmer not lay out timetable to quit.
G7 meeting today and tomorrow, not expected to yield much but to be watched for headlines.