Hopes of peace in the Middle East fade

Good morning

US data releases are still one hour earlier at 12.30 or 14.00 London time. 

FX option expiries will be 14.00 London time, not the usual 15.00 London time.

This will be until Sunday 29^th March when we change our clocks in the UK.

US and European equities had a decent day yesterday although Asian markets were in the red overnight and futures prices suggest a disappointing opening this morning.  Oil prices are up, USD is up and equities lower as some of optimism we saw earlier in the week for an earlier resolution of events in the Middle East wanes, amid reports that Iran has rejected the US peace plan.  Reports of a drone attack on a Turkish oil tanker in the Black Sea has added to the disappointment, as has renewed reports that Russia is providing intelligence and military support such as drones to Iran. 

Trump still has interest in a diplomatic solution as he looks for a quick end to the war, aiming for a 4-6 week timeline.  He has reorgansied his trip to see China’s Xi for 14-15^th May which would perhaps tie in with his timeframe but of course that could be wishful thinking. 

Feds Miran spoke yesterday.  We know he is the most dovish Fed official and always expect that tone from him, although yesterday he said he had raised his 2026 rate forecast by 50bps, citing disappointing inflation readings since December.  Worth noting that this is nothing to do with oil prices so there is a possibility this forecast could rise further if the Iran war continues, for now he sees 1% of cuts through 2026.

In terms of currencies, the US dollar is a touch higher with GBPUSD and EURUD at 1.3340 and 1.1555, while USDJPY is back up towards recent highs, now 159.50.  I’ve not mentioned gold for a few days, that is now trading around $4,430, up from the weeks lows that came in around $4,100 but still well off the March highs almost $1,000 above current levels.  I’m starting to look for upside option trades although no surprise that volatility is high and spreads are wide.  I’m thinking something along the lines of buying a one month call spread, part funded by selling a put or a put spread.   

International football begins today with several world cup qualifying matches and friendlies taking place this evening.  England play tomorrow night in a friendly against Uruguay.  

Plenty of central bank officials on the calendar today but not a lot of data, the US jobless claims could be the highlight.  Early tomorrow morning we’ll have the latest UK retail sales numbers.

Have a great day…

-  09.30 BoEs Breeden speaks

-  11.00 German Buba monthly report

-  12.30 US initial jobless claims

-  16.30 BoEs Greene speaks

-  19.05 BoEs Taylor speaks

-  20.00 Feds Cook speaks

-  22.30 Feds Miran speaks

-  23.00 Feds Jefferson, Logan speak

-  23.10 Feds Barr speaks

-  00.01 UK GfK consumer confidence

-  07.00 UK retail sales