Related Insights
US-Iran tensions appear to have risen, with reports of Iran mining the Strait of Hormuz again and Trump threatening to attack Iranian boats doing so. Israeli defence minister Katz also stated yesterday that Israel is poised to resume the war with Iran, when there is a green light from the US. With US stock markets back at record highs, markets are not expecting a re-escalation. But the USD and US yields have inched up with oil prices on an impasse at the Strait, with the DXY now sitting at its highest level in two weeks. Between on-off negotiations and military positioning, uncertainty is high and the USD could see more volatility depending on geopolitical developments.
Japan’s headline CPI for March rose to 1.5% y/y (Feb: 1.3%), while core-core CPI eased a tad to 2.4% y/y (Feb: 2.5%). Behind the tepid headline number is a build-up of price pressures that are being moderated by government fuel subsidies. Given passthroughs from crude prices over time, the BOJ is reportedly considering raising its inflation forecast sharply for its next quarterly outlook. Rate hikes will still be likely, though the timing could be delayed till June amidst high uncertainties over the Middle East. USD/JPY could remain supported amid high oil prices without a BOJ rate hike next week, but it should hold below 160 on risks of triggering verbal interventions from Finance Minister Katayama.
EUR/USD has eased below 1.17, weighed by a surprisingly large dip in the Eurozone Services PMI to 47.4 for April, which is the lowest since 2023. Such an unexpected deterioration in services activity could make it difficult for the ECB to sound hawkish, even as officials worry about price shocks from higher energy prices. The ECB is expected to keep rates unchanged in its policy meeting next week, with ECB President Lagarde having mentioned that there are limited signs of supply chains so far, and that uncertainty points to a need for more information before deciding on policy.
Quote of the Day
“I saw the angel in the marble and carved until I set him free.”
Michelangelo
April 24 in history
In 1503, Michelangelo received a commission to carve statues of the twelve Apostles for the Florence Cathedral.
Topic
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The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
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