The price of crude oil nears 6-month highs as markets see the prospect of a serious and possibly wide conflict between the US and Iran as more likely to happen soon.
- The dominant news today is the increasing perception that a US/Iran war is imminent and may break out within days if not weeks. The catalysts for these reports were leaks from the US and Israel, notably a report by the journalist Barak Ravid, and the movement of more than a dozen air refueling tankers from the USA to bases in the Middle East yesterday. The US now has its largest concentration of firepower in the region since 2003. This follows reports that the second round of talks between the US and Iran in Geneva which concluded earlier this week have left the US administration pessimistic about the prospect of reaching a deal which would be acceptable from their point of view. It may be that this news is repressing strong rises in stock markets which could otherwise be happening, but that seems unlikely. The only obvious market effect is the strong rise in the price of WTI Crude Oil which gained by more than 4% yesterday and is gaining further in early trading today to approach its 6-month high. If there is a bullish breakout to fresh highs, trend traders will want to be long, but it could be a sudden and dramatic spike higher than would flop quickly, meaning a tight stop loss once war breaks out, at least on closing prices, could be the best strategy.
- Stock markets and other risky assets have mostly moved higher over the past day, but only moderately so in the USA and Asia, while some European markets are slightly lower. The S&P 500 Index continues to look choppy below 7,000 and has failed to test its all-time high, increasingly suggesting that the bull market might have run out of steam.
- Precious metals are also moving higher, with Silver making the strongest gains, and Gold again trading above the key $5,000 level. Yet we are not seeing anything technically significant within this asset class, this is really just ranging price action.
- Bitcoin is still looking essentially bearish as it keeps failing to break above the key resistance level at $71,762. At the time of writing, the short-term price action is consolidative to weakly bullish as it holds up above the support level at $66,773, so we might be seeing the beginning of a double bottom which would make the picture more bullish technically.
- In the Forex market, the strongest major currency since today's Tokyo open has been the Australian Dollar, while the weakest has been the Japanese Yen, putting the AUD/JPY currency cross in focus. It is natural for the Yen to be getting sold this week after its excessively strong gain last week. The US Dollar has gained over the past day and may be further supported by yesterday's release of the most recent FOMC meeting minutes which confirmed the recent slightly hawkish tilt. The CME FedWatch tool has now shifted back to showing markets expecting only two rate cuts over the course of 2026, having previously priced in three cuts a few days ago.
- UK CPI (inflation) fell from an annualized rate of 3.4% to 3.0% as expected.
- Australian Unemployment data was a bit better than expected, with the Unemployment Rate unchanged at 4.1%.
- There will be a release of US Unemployment Claims data today.