USD Mixed as US-Iran Tensions Rattle Markets Before CPI
The dollar is moving in opposite directions against majors as war risk, inflation data, and big-bank earnings collide this week.
The dollar can't make up its mind. NZD is leading the charge against the greenback, down 0.42% on the day, while USD/JPY buyers stepped back in after Friday's slide, pushing the pair up 0.24%. EUR/USD is slightly negative for the dollar at -0.13%, and the pound is barely losing ground at +0.10%. Translation: the market is nervous, not panicking — yet.
Here's why traders are on edge. The US-Iran ceasefire fell apart over the weekend. Iran launched missiles and drones at US military facilities across the region. The US hit back with strikes on Iranian air-defense systems, radar, and naval assets. Now all eyes are on the Strait of Hormuz, where commercial shipping is already pulling back and insurers are repricing risk fast. If that chokepoint gets seriously disrupted, oil markets won't stay calm.
Read more Oil Surges 10% as Trump Blockades Iran and Taxes Hormuz Shipping →
Stock futures are pricing in the anxiety. The Dow is pointing to a 46-point drop at the open, the S&P is down 34, and the Nasdaq is getting hit hardest at -319 points. Risk-off is real, but not catastrophic — for now.
The macro calendar this week is absolutely stacked. US CPI drops Tuesday at 8:30 AM ET, and Fed Chair Kevin Warsh testifies on Capitol Hill both Tuesday and Wednesday starting at 10 AM ET. Any hawkish signal from Warsh on top of a hot inflation print could hammer equities and boost the dollar hard.
On the earnings front, every major Wall Street bank reports this week — JPMorgan, Goldman, Citi, BofA, Wells Fargo, Morgan Stanley. Expectations are elevated after a strong first half, so guidance matters more than the headline beat. Layer in Netflix, Taiwan Semiconductor, ASML, UnitedHealth, and GE Aerospace later in the week, and you've got a market that has almost no room to breathe. Continue reading at Forexlive.
