Another day and another move higher in the Dollar against most major currencies as markets digest US President Trump’s decision to abandon the 2015 nuclear deal with Iran. Trump said the US would reimpose economic sanctions on Iran, targeting Iran’s oil sector, aircraft manufacturers exporting to Iran and Iranian government attempts to buy US dollars.
The US said it would allow companies a six-month grace period, which leaves the door ajar to the US potentially returning to the negotiation table. Iran’s President Hassan Rouhani nevertheless responded by saying his country would restart its uranium enrichment program but leaders of the deal’s other signatories – France, the UK , Germany, China and Russia – said their agreement with Iran would remain in force for now.
Unsurprisingly the price of crude oil surged following Trump’s announcement, with Brent crude hitting $77/barrel, the high since end-2014. The currencies of oil producing countries, including Canada, have fared well with USD/CAD stable below 1.30.
Sterling is also broadly stable despite the release of very weak British Retail Consortium (BRC) data showing total sales falling 3.1% yoy in April. While the timing of Easter this year may have negatively impacted sales, this contraction – the largest since records began in 1995 – are in line with other macro data pointing to a timid recovery in UK growth in early Q2.
