Forex Today: Crude Oil Falls After Touching $100

WTI Crude Oil broefly reached $100 as markets opened for the week before falling back on Trump comments.

1. The US/Israel vs Iran war continues into its third week and is the dominant theme affecting markets. Iran continues to suffer an erasure of its military capability, and its rate of fire is continuing to dwindle. President Trump is signaling that the war will continue for a while, stating that Iran is not ready to negotiate, by which he means not ready to surrender sufficiently to his demands. Israeli officials yesterday spoke of the war continuing for at least another three weeks and prediction markets expect the war to run into April. It is clear that the USA and Israel can erode Iran's military capabilities down to a nub, but dealing with the large amount of enriched uranium still possessed by Iran still seems a huge challenge, and analysts do not expect the Iranian regime to fall, raising the question of how the war will end and what the post-war situation will look like.
2. Energy markets continue to be elevated, with WTI Crude Oil briefly reaching $100 earlier today before falling back to the $96 handle. Gasoline prices in the USA have risen by about $0.50 per gallon since last month. President Trump has made it clear the reopening of the Strait of Hormuz is not really America's problem, but he offered American input into a naval coalition of affected nations which would attempt to reopen the blocked Strait, effectively calling the bluff of G20 nations who complain about Hormuz but won't do anything about it except pressuring America to end the war.
3. President Trump is scheduled to travel to China in about two weeks. A few hours go Trump suggested the summit could be delayed and said that China should join any effort to reopen Hormuz. China gets much of its crude oil from Iran, is a lukewarm ally of Iran, so this is really a bluff to put China on the spot. China is financing wildly inaccurate AI-generated propaganda against Israel and the USA and in favour of Iran.
4. There is a more optimistic tone in the market today, with stocks higher and energies lower, which probably reflects increasing optimism that Iran's capability to threaten its neighbours is being increasingly degraded. Also, the US Dollar is giving up some of its recent gains, which is likely a minor bullish sign for risk sentiment. Yet betting on this is probably premature.
5. In the Forex market, the strongest major currency since today's Tokyo open has been the New Zealand Dollar, while the weakest has again been the Swiss Franc. The US Dollar is a bit weaker.
6. Wheat futures made a strong bullish breakout earlier this week, reaching a new 1.5-year high price, Trend traders mostly went long of wheat. If you want to do that but can't afford the expensive Wheat futures, there is a Wheat ETF called WEAT that could give you exposure to the grain. Soybeans also made a bullish breakout last week to near 2-year high prices and will also be attracting the interest of trend traders. This also has a more affordable ETF than the large futures contract called SOYB. Another commodity which has recently made new highs is Aluminium, which can be traded in large-sized futures or as a more affordable ETF (ALUM).
7. There will be a release of Canadian CPI (inflation) data later today which could affect the CAD. Month-on-month, CPI is expected to increase by 0.7%.
8. The Reserve Bank of Australia will be holding a policy meeting early tomorrow and is expected to hike its interest rate by 0.25%. If it passes on the hike, that will likely cause a significant drop in the AUD.