FX Daily Snapshot

The market impact of recent US retaliatory strikes against Iran has been muted, as attention shifts to the imminent US CPI report. Investors anticipate that a higher-than-expected inflation print could accelerate Fed tightening expectations and strengthen the USD.

Key Takeaways

• 1.The market reaction to US military strikes against Iran has been muted, suggesting investor confidence that the confrontation will be contained.
• 2.Upcoming US CPI report is the primary focus; consensus expects headline inflation to exceed 4% YoY, partly due to energy price base effects.
• 3.Recent strength in US yields and the USD is pressuring carry trades, which have otherwise performed well this year.

Table of Contents

• USD: Muted market response to US retaliatory strikes against Iran
• COMMODITY PRICES & CURRENCIES HAVE BEEN CORRECTING LOWER
• USD: Will US CPI report encourage further USD strength?
• KEY RELEASES AND EVENTS

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