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Brent jumps toward $88 as Hormuz standoff lifts inflation worries
The oil move is cited alongside higher Euro inflation swaps, fueling speculation that both the Fed and ECB could take a more hawkish path.
Deutsche Bank strategists say Brent crude has moved above $85, with the benchmark closing near $88, as the Strait of Hormuz remains shut and US and Iran rhetoric escalates.
In FXStreet coverage, the bank points to a fourth straight Brent rally, higher six-month futures, and rising euro inflation swaps as signals that inflation risks are increasing, which is boosting renewed speculation about more hawkish rate paths for the Federal Reserve and the European Central Bank.
FXStreet also links the inflation concerns to currency positioning, noting GBP/USD has been flirting with the 1.3500 area while renewed US dollar demand builds as a safe-haven amid surging oil prices and inflationary worries.
The report adds that Wednesday's US CPI data is the key event risk this week, with traders expected to stay cautious ahead of the inflation release.
Latest closeWTI crude $82.30 ▲5.3%|Brent $87.85 ▲5.2%|GBP/USD 1.351 ▲0.4%