MARKET REPORT
Oil Surges, Dollar Firms as Central Bank Super Week Gets Underway
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JPY rallies on BoJ hold with hawkish inflation revision – June hike now 70% priced
USD rallying as Iran deal optimism fades
- Political risk returns as Starmer faces parliamentary vote today
Recap
USD fell for a second consecutive session on Monday, with the USD Spot Index dropping 0.3%, as markets digested Iran's new proposal to reopen the Strait of Hormuz and positioned cautiously ahead of a packed week of central bank decisions. All G10 currencies advanced against the greenback.
AUD led the gains, with GBPAUD falling 0.43% as the Iran proposal flipped commodity currencies from losses to gains. GBPUSD gained 0.21%, up 0.7% over two sessions, whilst EURUSD edged up 0.20%, holding firm as the dollar softened ahead of this week's central bank decisions.
The Iran Hormuz offer provided the session's key catalyst, though as noted previously, trader fatigue around geopolitical headlines is increasingly evident – the market reaction, whilst positive, was measured rather than euphoric. The durability of any move remains entirely dependent on whether the proposal translates into actual progress
Today
Market rates
*Daily move - against G10 rates as of 5pm BST on 27.04.26
** Indicative rates - interbank rates as of 5pm BST on 27.4.26
Data points
Click here for a calendar of upcoming economic events Our thoughts
The BoJ held at 0.75% in a 6-3 vote this morning but adjusted its inflation outlook higher – a hawkish signal that has sent JPY rallying 0.2% and pushed June rate hike odds to around 70%.
The geopolitical backdrop has darkened overnight. The White House is maintaining its "red lines" on Iran's nuclear programme; Iran's Foreign Minister has been in Moscow reaffirming ties with Russia; and nuclear negotiations have reportedly been signalled for deferral. Whilst one LNG tanker has been seen exiting the Strait of Hormuz – the first since the conflict began – Brent has extended gains, suggesting markets remain unconvinced the strait is truly open. USD is stronger this morning as yesterday's Iran optimism fades.
For GBP, PM Starmer faces a parliamentary vote today on whether to formally investigate his assurances over the Mandelson appointment, adding domestic political risk just two days before Thursday's BoE decision. US consumer confidence also prints today – any further deterioration from the 91.8 prior would add to concerns about the US consumer. Wednesday's Fed and Thursday's BoE, ECB, Core PCE and Q1 GDP remain the defining moments of the week.
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