Trump proposes 15-point peace plan

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.

Markets may still be hoping for an early end to the Middle East conflict but they do seem to be pricing in less optimism.   While we are all hoping for a de-escalation I have seen some worrying comments reportedly from Iran that potentially opens up their range of what they see as legitimate targets, this time suggesting that any entity that holds US treasuries could be deemed worthy of an attack.  Having helped to upset global energy markets, are Iran now trying to ravage the US financial system by triggering a mass sell-off of US treasuries?

US markets were a touch lower yesterday while the US dollar was reasonably stable, GBPUSD and EURUSD are pretty much where they were this time yesterday give or take a few points.  Asian markets overnight were actually pretty positive, particularly in Japan where the Nikkei was up close to 3% and futures pricing points to a positive start to European markets.  This latest bout of positivity comes from news the US has drafted a 15 part plan to end the Iranian war.  These include keeping Strait of Hormuz open, stopping any pursuit of nuclear weapons or uranium enrichment and limiting missile production.  Oil prices have shifted lower as a result.

Trump insists Iran are looking to strike a deal but Iran continue to deny they are talking, claiming US is negotiating with itself, but it does seem as though messages are being passed between officials.  There are suggestions that high-level talks could take place as early as Thursday.  Iran has now said non-hostile vessels can pass through the Strait, although I’m not sure exactly what they regard as non-hostile at the moment.  Trump is still looking for help from allies and The Times reports the Royal Navy is planning a mission to reopen the Strait of Hormuz, including minesweeping, alongside US and French forces. 

Overnight Aussie inflation came in very slightly softer than expected, overall AUD is a touch lower but really back at levels seen yesterday morning with GBPAUD now 1.9230.  Aussie inflation may look a touch softer but remains at elevated levels and with risks firmly to the upside it is still highly likely RBA raise rates again in May.  GBP found a bit of support following UK inflation data this morning, with core CPI up to 3.2% from 3.1% although the headline figure was unchanged at 3%.PPI and RPI levels were lower across the board but GBP has pushed higher with GBPUSD up from 1.3380 or so to 1.3410.  Part of that move does seem to be related to USD weakness, with EURUSD also ticking up, now just above 1.1600, but GBP has benefitted most, with GBPEUR recovering from overnight lows.    

Not much of note on the calendar today but attention will be firmly on whether Iran has any interest in the US peace plans.  My guess is that there will be some Iranian officials who are in favour of the plans, perhaps those who the US would ultimately like to see in charge, while other hard-liners will surely oppose the plan.  It is difficult to know who is really running the country, as such I expect plenty of conflicting headlines which won’t help market stability.  We can only hope for an early end.

Have a great day…

-  09.00 German IFO

-  09.15 ECBs Lane speaks

-  12.00 BoEs Greene speaks

-  14.00 SNB quarterly bulletin

-  20.10 Feds Miran speaks