With the US stock market notably heading higher and crude oil trading closer to $90, it seems clear that markets are becoming increasingly optimistic over the prospect of a deal to effectively end the US/Iran war.
- The big news today is a more bullish and optimistic market, which is seeing major stock indices rising strongly (the S&P 500 Index is within sight of 7,000 again for the first time in weeks), and Crude Oil prices falling notably, with WTI trading near $92.50. It seems clear that this is being driven by increasing optimism in the market about the prospect of a US/Iran deal to end the war, which I think is strange as I cannot imagine how the countries' red lines can be accommodated. However, there have been reports that Iran offered to suspend uranium enrichment for 10 years. President Trump yesterday began a naval blockade of all shipping to and from Iranian ports, although there have been reports that a Chinese ship was allowed through. It is hard to imagine the US attacking Chinese or Russian ships, so the story rings true. According to the prediction site Polymarket, a permanent deal to end the war is likely to happen in June. The existing ceasefire has another week to run.
- As is typical, Gold and Silver are moving higher in line with the rising US stock market.
- In the Forex market, the New Zealand Dollar has been the strongest major currency since today's Tokyo open, while the Australian Dollar has been the weakest. The USD/JPY currency pair is taking another bearish turn as it again fails to make a significant new high. Trend traders will still be long of USD/JPY on the bullish breakout which we saw two weeks ago, although this very slow-moving trade is looking less and less attractive.
- Bitcoin has benefited from the more bullish risk-on sentiment, as it is now rising and threatening to make a significant bullish breakout beyond the big round number area at $75,000. A daily close above $75,000 could be an interesting long trade entry.
- There will be a release today of US PPI data which could affect the relative value of the US Dollar.
- The Monetary Authority of Singapore tightened its policy settings, quoting the potential inflationary impact of the Iran war - like most of Asia, Singapore gets a lot of its crude oil from Iran. This should help firm the value of the Singapore Dollar. Indeed, we see the USD/SGD currency pair currently threatening to test significant lows.