Markets:
WTI crude oil down $6.13 to $67.71US 10-year yields down 3.5 bps to 4.34%Gold up $5 to $3373S&P 500 up 1.0%GBP leads, CAD lagsI hope you enjoyed the show. Today's news and price action was a reminder that the puppet masters are all just playing games, even in war.
The first tip of the day was from Trump, who jawboned oil lower. Now this isn't the first time that Trump has make some market-sensitive comments on price direction and you might remember when he hinted at buying stocks before backing off on Liberation Day tariffs. Today was similar as we learned shortly after Iran's retaliatory strikes that the US was forewarned where they were attacking -- essentially that it was all theatre.
With that, crude was crushed in the clearest sign of de-esclation in the war. If anything, it looks like the war might be over completely with in days, as there is no appetite for a ground invasion or long US involvement. After peaking at $78.40 shortly after the open, WTI crude was sold hard all day and fell to $67.70, an $11 intraday decline.
It was a similar story elsewhere as all the war trades unwound: stock markets rallied and a bid in the US dollar reversed. The dollar rally was helped along by a pivot from the Fed's Bowman. Last year she dissented against Fed cuts but is now calling for a cut as soon as July. That kind of shift as Trump gets ready to pick a new Fed Chair isn't doing wonders for Fed credibility nor the dollar.
The reason the US dollar was so soft afterwards -- USD/JPY completely reversed a 200 pip gain -- is that Fed policy is so uncertain at the moment. Other central banks have cut far enough to take a pause at lower levels but the Fed could cut materially from here, particularly with oil prices dropping like they did today.
Eyes are now on the euro as it nears 1.16 once again and looks set to finish at the highs of the day.
This article was written by Adam Button at www.forexlive.com. Read More Details
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