The potential for a US-Iran deal to reopen the Strait of Hormuz is likely to pressure US front-end yields and the dollar lower. Meanwhile, the Japanese Ministry of Finance is expected to confirm a record JPY 10tm intervention that has failed to keep USD/JPY away from the 160 level.
Key Takeaways
- 1.An imminent US-Iran deal involving the reopening of the Strait of Hormuz is expected to lower front-end yields and weaken the USD.
- 2.Despite the potential deal, significant downside for crude oil is limited by supply constraints and reduced US exports.
- 3.MUFG estimates JPY 10tm in recent yen buying intervention, which would be the largest but least successful intervention episode to date.
Table of Contents
- USD: The Fed could find scope for easing by year-end
- YEN BUYING INTERVENTION IN TODAY'S DATA COULD BE LARGER THAN RECENT PAST YEN BUYING OPERATIONS
- JPY: Katayama remains markets of intervention threat
- KEY RELEASES AND EVENTS
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Authors
Derek Halpenny
Securities
USDJPYBrent CrudeDXY
Themes
Geopolitical De-escalationCurrency Intervention EffectivenessCentral Bank Policy Divergence
Regions
Middle EastNorth AmericaAsia PacificUnited StatesIranJapan