The US Dollar has started the new week stronger on continuing fears over inflation and rates, partially stoked by renewed fighting over the Strait of Hormuz.
- The USA / Iran confrontation has continued to flare, with the USA bombing Iran for another night after Iran fired on ships in the Strait of Hormuz and on several Gulf nations. I have been writing here for a while that the US administration's pursuit of a "good deal" with the regime in Iran will never yield fruit and is incompetence and wishful thinking taken to an infinite level. Unfortunately, I am being proven right. The Strait of Hormuz is effectively 99% closed, with just a tiny trickly of crude oil shipping getting through, or any shipping for that matter. The potentially inflationary impact of this, if the situation continues, is leading to higher US yields and a stronger US Dollar. We are also seeing spot WTI Crude Oil trading over 4% higher than its closing price last Friday - I said yesterday that WTI could be a good buy today after finding support at the former pre-war resistance level of $67.11.
- The latest commentary around the Fed's recent meeting minutes release last week sees ongoing belief that more rate hikes are coming and that inflation risk remains skewed to the upside.
- The USD/JPY currency pair is looking a little firmer but is still basically consolidating within an area of high volatility not far from its multi-decade high price. The US Dollar Index is higher today, but not by much, and is still some way from the key resistance level at 101.39 which has prevented a more meaningful bullish breakout.
- Equities are mixed to lower. In the USA, the S&P 500 Index has been recently looking stronger than the NASDAQ 100 Index, which is an interesting indication of a rotation out of tech / AI stocks.
- Precious metals such as Silver and Gold are falling again, especially Gold, which looks like it might be on its way to testing its 7-month low. Gold, notably, is still being held by a long-term descending trend line which currently sits at about $4,200. I do not short commodities, but if I did, I would be short of these two precious metals.
- Bitcoin looks like it is currently rejecting the key resistance level at $65,000 more decisively, suggesting we are going to see more downside here today.
- There are no high-impact data releases scheduled today, so it might be a relatively quiet day in the markets.