The Dollar/Yen currency pair briefly made a new long-term high before pulling back as the US Dollar starts to get sold today.
- It might be a quiet day in the market today, as it is a Monday (which is typically quiet), and there are no high-impact economic data releases scheduled. However, markets have been quite active lately, so that could continue. The US Dollar was very strong last week, while stock markets (especially in the USA) suffered a selloff which have led some analysts to see the market as a bear market, although the 10% decline from the recent high in the S&P 500 Index has not yet been completed to even technically put the Index into correction territory.
- In the Forex market, the Japanese Yen has been the strongest major currency since the week's open, while the Australian Dollar has been the weakest, putting the AUD/JPY currency cross in focus. Markets are already centering the Japanese Yen, with the USD/JPY currency pair reaching an 18-month high earlier today before falling back on Yen strength and minor Dollar weakness. Trend traders will be long of USD/JPY on this bullish breakout which we have seen in recent days.
- Speculation about the ongoing war in the Middle East continues, although in recent days it has started to look as if the war is going to last a few more weeks, while earlier many had expected it to end by April. According to the prediction site Polymarket, the US will likely announce an end to military operations in Iran in May, and a ceasefire agreement is expected in June. This suggests another month of war at least. Polymarket also sees a US ground operation on Iranian territory happening before the end of April. President Trump has been publicly mulling using US troops to seize Kharg or another strategic Iranian island, "taking control of Iran's oil", or seizing Iran's uranium stockpile. However, he also praised Iran for allowing more ships through the Strait of Hormuz and said that negotiations (which Iran is still denying are taking place) are going well. If the war came to a sudden end, it is likely that crude oil would drop heavily while stock markets would enjoy a recovery. Trump also praised the US military for assassinating some high-rankingIranian regime personnel over the weekend.
- There is a lot of propaganda on social media which suggests the war is going badly for the USA and Israel in particular, likely funded by China which is an ally and major customer of Iran. The truth is that the USA and Israel have barely been scratched while the Iranian regime has suffered catastrophic losses. Total US / Israeli casualties killed is approximately 40 people over the entire war. The only serious questions are whether the USA could succeed with limited ground operations, and whether the Iranian regime will survive, and if so for how long.
- The most volatile markets right now:
- Crude Oil is falling after gapping higher at this week's open, with WTI futures making a long-term high close on Friday above $100 per barrel.
- RBOB Gasoline futures are trading near long-term highs.
- Gold and Silver are continuing to rise weakly as volatility continues to decline in precious metals. I think Gold will face overhead resistance relatively nearby at about $4,600.
- Bonds and yields are continuing to rise globally as markets see the likely impact of the Middle East war as an inflationary shock which will require generally elevated levels of interest rates.