Investors and forex traders are awaiting a resolution of the situation in the Middle East and a mitigation of the consequences of the energy crisis, although the diplomatic process has been interrupted, and the Strait of Hormuz remains unavailable for hydrocarbon transportation. Yesterday, market participants received a number of positive signals that increased their interest in assets alternative to the dollar: Iran proposed opening vessel traffic through the waters in exchange for lifting the blockade of ports, while discussion of Tehran’s nuclear programme should be postponed indefinitely. US Secretary of State Marco Rubio responded sceptically to the initiative, noting that the sea route would remain under the control of the Islamic Revolutionary Guard Corps (IRGC), which does not satisfy Washington; however, President Donald Trump discussed it with his advisers today. Tomorrow at 20:00 (GMT+2), traders will focus on the results of the US Federal Reserve monetary policy meeting: the regulator is likely to keep the interest rate at 3.75%, as inflation in March, although it rose to 3.3%, came in below experts’ expectations of 3.4% amid a stable labour market, where unemployment fell to 4.3% in March and employment increased by 178.0 thousand. Officials’ comments will certainly be key for further forecasts: most experts currently expect that by the end of the year the US Federal Reserve may move toward lowering borrowing costs, as Kevin Warsh, who is loyal to the White House, is expected to be approved as its head and has already stated that he expects debate among board members on policy adjustments.
Eurozone
The euro is gaining against the pound but weakening against the US dollar and showing mixed dynamics against the yen.
Market participants are analysing the European Central Bank’s (ECB) lending survey, according to which eurozone financial institutions tightened borrowing conditions in the first three months of the current year and expect this process to continue, as the Middle East conflict has already led to an unprecedented rise in energy prices and funding costs. At the same time, officials point to worsening economic prospects and lower risk tolerance among banks. It is also worth noting that demand for loans among European businesses has recently declined noticeably.
United Kingdom
The pound is losing ground against its main competitors — the euro, the yen and the US dollar.
Today, April data on the retail sales index from the British Retail Consortium (BRC) was published: the indicator fell from 1.2% to 1.0%, against a forecast of 1.4%, which experts attribute to discount policies for Easter goods, confectionery, home improvement materials and clothing. Separately, food price inflation slowed from 3.4% to 3.1% but remains above the Bank of England’s 2.0% target. Commenting on the data, BRC chief executive Helen Dickinson noted that amid weakening consumer confidence, retailers intensified price competition to encourage households to spend. Meanwhile, according to the consortium’s estimates, sales volumes themselves fell by 40.0% this month, which is concerning for experts as it confirms significant pressure from the consequences of the Middle East crisis on the British economy.
Japan
The yen is gaining against the pound and showing mixed dynamics against the euro and the US dollar.
Today, the Bank of Japan kept the interest rate at 0.75%; however, three board members — Hajime Takata, Naoki Tamura and Junko Nakagawa — disagreed with this decision and proposed raising the rate by 25 basis points to 1.00%. Market participants also noted a revision of the national economic growth forecast from 1.0% to 0.5% and core inflation from 1.9% to 2.8%, while headline inflation, as before, was fixed around 2.0%. The regulator specifically emphasised that the consequences of the Middle East crisis, particularly restrictions on corporate profits and real household incomes, are already being reflected in macroeconomic indicators. In turn, Bank of Japan Governor Kazuo Ueda noted the need to ignore temporary inflation shocks caused by rising energy prices; however, if expectations regarding the pace of consumer prices become entrenched, the bank will have to return to tightening monetary conditions.
Australia
The Australian currency is strengthening against the euro but weakening against the yen and the US dollar and showing mixed dynamics against the pound.
In the absence of significant economic releases, quote movements are being driven by external factors. Market participants focused on reports that owners of the social networks Facebook, TikTok and Google may face a 2.25% tax on revenue generated in the local market if management does not reach agreements with Australian media outlets on payments for placing news feeds on their platforms. Experts fear that such measures could provoke a negative reaction from the White House and a subsequent increase in trade tariffs. Tomorrow at 03:30 (GMT+2), investors will focus on inflation statistics for the first quarter: the consumer price index is likely to rise from 3.6% to 4.1% year-on-year, while the trimmed mean measure may increase from 3.4% to 3.5%, significantly exceeding the Reserve Bank of Australia’s (RBA) target range of 2.0–3.0% and increasing the likelihood of monetary tightening at the next meeting.
Oil
Oil prices showed mixed dynamics today: in the morning, they demonstrated rapid upward movement but then corrected sharply downward, coming under pressure from the decision of the United Arab Emirates (UAE) to leave OPEC and OPEC+ from May 1. It should be recalled that before the start of the US-Iran confrontation, the UAE was the alliance’s third-largest producer after Saudi Arabia and Iraq. It joined the organisation in 1967, seven years after its creation. Experts believe that oil production may now increase significantly, although problems with delivering it to consumers remain relevant. Today at 22:30 (GMT+2), traders will pay attention to the weekly report from the American Petroleum Institute (API): last time, it recorded a decline in inventories of 4.400 million barrels, and a continuation of this trend may support energy prices.
