[MARKET ANALYSIS] DXY takes a breather after strengthening yesterday as geopolitics dominated the tape
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[MARKET ANALYSIS] Asia-Pac stocks trade mixed after Trump extended the ceasefire indefinitely, despite the collapse of Islamabad talks, but instructed the US military to continue the blockade
US blocks Iraq's dollar shipments to squeeze its Iran-backed militias and suspends security cooperation with Baghdad in an escalating pressure campaign, according to WSJ
[MARKET ANALYSIS] DXY takes a breather after strengthening yesterday as geopolitics dominated the tape
[MARKET ANALYSIS] T-note futures are little changed after recent declines and curve flattening as prospects of US-Iran talks faded
[MARKET ANALYSIS] Oil prices are rangebound after recent choppy price action amid a breakdown of Islamabad talks, Trump's ceasefire extension and continued naval blockade
On the Newsquawk feed at , 20 minutes before this page.
DXY: -0.1%
- Takes a breather after strengthening yesterday as geopolitics once again dominated the tape and price action, in which the focus was on the US-Iran Islamabad talks, which were set for Wednesday, but ultimately collapsed after it was reported that Iran's decision not to attend the talks was final and US VP Vance's trip was indefinitely postponed. There was also a further bout of volatility in markets after US President Trump announced to extend the ceasefire until negotiations conclude, but also instructed the military to continue to blockade. Outside of geopolitics, data showed US Retail Sales beat expectations, though the rise was driven by a hefty jump in petrol prices, while pending home sales also impressed, and Fed Chair nominee Warsh appeared before the Senate, where he largely stressed the importance of Fed independence and stated several times that he would not let the president dictate his decisions on interest rates.
EUR/USD: Flat
- Rebounded off its recent trough after trickling lower for most of the prior day, with the single currency not helped by the weak ZEW surveys, while several ECB speakers are scheduled later.
GBP/USD: +0.1%
- Remains afloat around the 1.3500 focal point, where price action has been choppy and with participants now awaiting UK inflation data.
USD/JPY: Flat
- Pauses overnight after returning to above the 159.00 level, and with a couple of recent source reports continued to point to the BoJ holding off on hiking rates next week.
Antipodeans: AUD/USD +0.1% / NZD/USD +0.3%
- Nursed some of the prior day's losses but with upside contained amid the mixed risk appetite and lack of relevant tier-1 data.
Context
The DXY index is experiencing a slight pullback after a prior day of strength, largely influenced by ongoing geopolitical tensions, notably around US-Iran talks that fell through. The mixed sentiment is reflected across major currency pairs, with retail sales data showing strong performance mainly due to rising petrol prices, suggesting underlying inflation concerns, while Fed Chair nominee Warsh's emphasis on the Fed's independence may also impact future market expectations regarding interest rates.
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