Oil prices surge
Oil prices surged in today’s opening, as the US-Iranian conflict stoked fear among oil traders for the possibility of a supply shortage in the international oil market. The market worries were intense and the announcement of an increase in oil production by OPEC was not able to tame them.
The fact that the US attack did not seem to shake the Iranian regime tends to highlight the possibility of a continuance of the conflict with further escalation being quite possible. Please bear in mind that despite the Straits of Hormuz, a key passage way for oil tankers, having effectively being closed by Iran yet not been mined yet.
Xlence Research Team opinion
Should we see US-Iranian conflict escalating further, or signs of a prolonged military conflict, we may see oil market participants’ worries for the supply side of the international oil market intensifying further and thus oil prices may get additional support. On the flip side a possible easing of the tensions could weigh on oil prices, yet that scenario at the current stage seems to be remote.
Uncertainty weighs on US stock markets
Major US stock market indexes Dow Jones, S&P 500 and Nasdaq all dropped lower as the uncertainty created by the US Iranian conflict weighed. The market sentiment turned increasingly cautious and its characteristic that gold’s price as a safe haven trading instrument got some support. Please note that the uncertainty caused by the US Iranian conflict was added to allready existing equity market uncertainty caused by the role of AI and the size of us investments in the sector.
Xlence Research Team opinion
For the time being we see the case for the market’s cautiousness to be maintained, which in turn may allow for the bears to continue to dominate US equity markets. On the other hand should we see the market starting to digest the fundamentals concerning the US attack on Iran, in some sort of normalisation, we may see US equities recovering some ground.
Bitcoin remains surprisingly stable
Despite the turbulence in the markets, Bitcoin remained surprisingly stable just above the $65k support level in the crypto market. We would expect that the cautious market sentiment could weigh on the cryptocurrency king given the market’s perception of it being of a riskier nature, yet that was not the case, at least not yet. Please note that the cryptocurrency market was open at the time the attack on Iran was initiated yet presented little volatility.
Xlence Research Team opinion
For the time being we see he case for Bitcoin’s price to remain in a sideways motion as described above, yet at the same time we warn for the possibility of a downward movement given that the market maintains a bearish predisposition.
USD gains while EUR and JPY lose ground
The USD rallied against its counterparts in the FX market, strengthening practically across the board, even against safe haven instruments such as JPY and CHF.
We note that the EUR could lose further ground as its energy situation becomes even more difficult. We also note that the rise of oil prices could stoke inflationary pressures in the US economy forcing the Fed to maintain rates at high levels, possibly for a longer period than what the market may have been expecting.
Overall for the week, the FX market is expected to keep a close eye on the release of the US employment report for February on Friday and for today we highlight the release of the US ISM manufacturing PMI figure for February and a possible rise of the indicators’ reading could take the markets by surprise providing additional support for the greenback.
Xlence Research Team opinion
For the time being we expect the dominance of the USD in the FX market to be maintained and further cautiousness of the markets could provide additional support for the USD at the current stage.
Disclaimer: This information is not considered investment advice or an investment recommendation, but instead a marketing communication.
