So, the US president yesterday made his sentence to the Iranian nuclear deal, despite the protests of many world leaders. The White House will resume the sanctions in half a year, which lasted until January 2016. First of all, the oil export sector of Iran will suffer, since Trump, in essence, will try to isolate the country from the world market. Here, it is worth noting that the Iranians export more than two million barrels a day, so the actions of Americans can cause a serious imbalance in the oil market.
The main "beneficiaries" of the current situation were the dollar and, of course, oil. The barrel of Brent crude oil has already tested the $ 77 mark, while WTI has consolidated above $ 70. The growth of the oil market had indirect support for the US currency, since this dynamic will accelerate the rate of inflation in the US. This aspect is important for traders in the context of tightening monetary policy. The strengthening of price pressure amid continued strengthening of the labor market will allow the Fed to consider a fourfold rate increase this year.
This "formula" is not an axiom. During the May meeting of the Fed, the regulator's members stressed that exceeding the target inflation rate would not automatically accelerate the pace of normalization of monetary policy. At the same time, many members of the Federal Reserve do not exclude the option of a fourfold increase in the rate this year, so the growth of key indicators will increase the likelihood of the implementation of this scenario.
This circumstance explains the dollar's reaction to the decision of Donald Trump. In addition, the yield of 10-year Treasury securities again approached 3%, providing additional support for the US currency.
But the main outsider of the currency market yesterday was the yen. The pair USD / JPY again got to the 110th mark, demonstrating bullish sentiment. This fact causes some surprise, since the Japanese currency has the status of "refuge", and, consequently, the growth of geopolitical tension should have had a positive impact on it. But in this case, traders decided not to jump to conclusions and wait with panic.
The fact is that Trump voiced the general solution, without going into details. First, the list of American sanctions against Iran is unknown. The head of the US hinted at a wider list of sanctions measures, intimidating "the highest level of sanctions pressure." However, Trump did not specify his intentions.
Secondly, the US now needs to convince the rest of the nuclear agreement to break the deal. Let me remind you that Iran signed this agreement with the countries of the "Big Six". In addition to the US, China, France, Britain, Germany and the Russian Federation participated in the negotiations. Representatives of these countries over the past few weeks have tried to convince Trump not to break the agreements, prolonging the "freeze" of sanctions. Therefore, it is difficult to imagine that world leaders will support Trump in this matter, even despite the expected blackmail in the sphere of tariff policy. It should also be noted that Iran sells "black gold" mainly to the EU, China and India. Without the participation of these countries, the sanctions will not make sense. Therefore, now it is impossible to say that Iran has returned in 2015. Trump, in this issue was "one warrior in the field" without the necessary support of the world community.
All this suggests that the issue of the trade war is not removed from the agenda. Washington will certainly press on China and the EU, demanding to join the economic blockade of Iran. But the US-China talks, when they started, ended in failure. Now, this multi-level equation will also be supplemented by the Iranian issue, thereby complicating the negotiation process.
Given the foregoing, it should be assumed that in the next few months, relations between the United States and the European Union will also deteriorate significantly. It is worth recalling that on May 1, the States postponed the introduction of duties on steel and aluminum for a number of countries, including for the EU countries. But the next grace period ends very soon, on June 1, and the issue of prolongation depends on the position of the American president. In addition, the issue of increasing duties on the import of German cars in the US remains open. Trump, several months ago threatened this measure, erecting over Germany a kind of "Damocles sword." All these "arguments" may (and probably will) be used by the White House in the aspect of the Iranian issue.
But today, the market has focused on the likely acceleration of US inflation due to the growth of the oil market. Among the dollar pairs, the yen suffered most of all, for two main reasons. As I said above, the participants of the foreign exchange market do not see any reason for panic. In addition, the yen was pressured by the news of the largest deal this year. It's about buying recruitment company Recruit Holdings service reviews about employers Glassdoor. The transaction amount is 1.2 billion dollars. If the Japanese regulators do not block this agreement, this deal will be formalized this fall.
But this factor has an indirect effect on the pair USD / JPY. The main driver of the price movement is the US dollar. It is necessary to pay attention to the fact that level 110 is still an impregnable fortress for the bulls of the pair, therefore it is necessary to follow the mark carefully. Technically, the price can go to the main resistance level (110.60 - Bollinger Bands top line on D1), but 110th level is difficult to overcome. Therefore, if bulls USD / JPY are fixed in this area, the path higher will be opened. But, in my opinion, in the near future we can expect a price pullback to the base of the 109th figure.
