Investors remain focused on the escalation of geopolitical tensions in the Middle East. Over the weekend, the United States and Iran continued exchanging missile strikes, while the authorities of the Islamic Republic announced the closure of the Strait of Hormuz until the situation stabilises. Although the White House claims that passage through this crucial maritime transport route remains open, traffic has declined significantly amid a sharp increase in the risk premium. A prolonged blockade could trigger another rise in oil prices, keeping inflation elevated and forcing the US Federal Reserve to resume monetary policy tightening. Tomorrow at 14:30 (GMT+2), the June Consumer Price Index will be released. The annual rate is expected to slow from 4.2% to 3.8%, while the core indicator is forecast to remain at 2.9%, well above the 2.0% target. This could strengthen hawkish sentiment among officials, who confirmed their readiness to raise interest rates in the minutes of the regulator’s latest meeting.
Eurozone
The euro is strengthening against the yen, the pound and the US dollar.
Yesterday, Bank of Greece Governor Yannis Stournaras said that the renewed conflict between the United States and Iran, which could deepen the energy crisis, was increasing uncertainty surrounding inflation and monetary policy in the eurozone. Experts note that the risk of another rise in the Consumer Price Index could force European Central Bank (ECB) officials to consider an additional interest rate increase at next week’s meeting. However, price pressure in the EU currently remains moderate: in June, core inflation stood at 2.4%, while the headline rate reached 2.8%.
United Kingdom
The pound is weakening against the euro but strengthening against the yen and the US dollar.
At 10:45 (GMT+2) and 22:00 (GMT+2), Bank of England Governor Andrew Bailey will speak before the Treasury Select Committee during a discussion of the July Financial Stability Report. Market participants will look for signals regarding the regulator’s future monetary policy actions, particularly the timing and direction of interest rate adjustments. Most traders currently expect officials to return to a hawkish stance and raise borrowing costs by at least 33 basis points before the end of the year.
Japan
The yen is weakening against the euro, the pound and the US dollar.
The currency remains under pressure due to investor disappointment with the government’s policy regarding the Government Pension Investment Fund. On Friday, reports suggested that the fund could reallocate part of its portfolio toward domestic projects, significantly strengthening the country’s financial stability, whereas previously 50.0% of its assets had been invested abroad. However, Reuters reported today that such measures are still under discussion and have not yet been approved. Tomorrow at 06:30 (GMT+2), May industrial production data will be released. According to forecasts, output may increase by 0.5%, providing support for the yen.
Australia
The Australian dollar is weakening against the euro and the pound, strengthening against the yen and showing mixed dynamics against the US currency.
The Chinese government has allowed private processors to import Australian rapeseed, indicating an improvement in trade relations between Beijing and Canberra. This decision may provide significant support to producers, as China is the world’s largest rapeseed importer and Australia is its second-largest exporter. Tomorrow at 02:20 (GMT+2), the Westpac Banking Corp. Consumer Sentiment Index will be released and is expected to rise from –2.9% to 2.5%. At 03:30 (GMT+2), investors will receive the June business confidence indicator from the National Australia Bank (NAB), which is forecast to improve from –14.0 points to –12.0 points. If expectations are met, the data will confirm the resilience of the national economy to the consequences of the energy and trade crises, strengthening the Australian currency.
Oil
Oil prices are attempting to rise.
The positive momentum is developing amid escalating geopolitical tensions in the Middle East. Contrary to investors’ hopes, mutual attacks between the United States and Iran are continuing as both sides seek full control over the Strait of Hormuz, where shipping has once again been halted. This increases the risk of another reduction in global oil supplies and a deepening of the worldwide energy crisis. Today, US President Donald Trump said that, in such a scenario, the White House should receive compensation for protecting the waterway. This effectively suggests the possible introduction of fees for the passage of commercial vessels, payable not to Tehran but to Washington, and could accelerate the rise in hydrocarbon prices even further.
