OIL ABOVE $90 PUTS THE US DOLLAR, FED EXPECTATIONS, AND ECB IN FOCUS

TL;DR:

• Renewed U.S.–Iran attacks and reduced shipping through the Strait of Hormuz pushed oil above $90 per barrel, supporting the safe-haven U.S. dollar.
• U.S. inflation cooled in June, but higher energy prices revived concerns that inflation could rise again and keep Federal Reserve rates elevated.
• USD/JPY remains near 162.00, while the euro, pound, Australian dollar, and New Zealand dollar face pressure from dollar strength and weaker risk appetite.

What Happened Last Week: July 13–17

Monday: U.S.–Iran tensions intensified and shipping activity through the Strait of Hormuz slowed. Oil prices jumped, the dollar strengthened, and global equities came under pressure.

Tuesday: U.S. Consumer Price Index, or CPI, fell 0.4% in June but remained 3.5% higher than a year earlier. Core CPI, which excludes food and energy, was unchanged monthly and rose 2.6% annually.

Wednesday: U.S. producer prices fell 0.3% monthly but remained 5.5% higher annually. China’s second-quarter economy grew 4.3%, while retail sales increased only 1.0%. The Bank of Canada kept its policy rate at 2.25%.

Thursday: U.S. retail sales rose 0.2%, while weekly unemployment claims fell to 208,000. The figures suggested that consumer demand and the labour market remained relatively stable.

Friday: U.S. industrial production increased only 0.1%, while consumer sentiment improved to 54.4. Technology weakness pushed the Nasdaq down 2.9% for the week, while the S&P 500 lost around 1.6%.

What to Watch This Week: July 20–24

Monday: China kept its Loan Prime Rates—benchmark lending rates—unchanged at 3.00% and 3.50%. Canadian inflation, oil prices, and U.S.–Iran developments may influence CAD and broader risk sentiment.

Tuesday: UK employment, unemployment, and wage data could affect GBP/USD and expectations for the Bank of England’s next interest-rate decision.

Wednesday: UK inflation and Japanese trade data are scheduled. U.S. oil inventory reports may also affect crude prices, inflation expectations, and commodity-linked currencies.

Thursday: The European Central Bank is broadly expected to hold its deposit rate at 2.25%. Its comments about energy prices and inflation could move EUR/USD. Australian employment, Canadian retail sales, and U.S. jobless claims are also due.

Friday: Japan will release inflation data, while global flash PMIs—early surveys of business activity—will provide an updated view of economic growth. UK retail sales and U.S. new-home sales are also scheduled.

Summary:

Oil prices and geopolitical developments may remain the strongest market drivers. The dollar is receiving support from safe-haven demand and higher U.S. yields, while USD/JPY remains sensitive to possible intervention from Japanese authorities. Gold, major indices, Bitcoin, and Ether may continue reacting to changes in risk sentiment and interest-rate expectations.

Disclaimer:

This note is for informational and educational purposes only and does not constitute financial advice. Trading involves risk, and you should conduct your own analysis or consult a professional before making any trading decisions.