ATFX Forex Outlook: Ceasefire Agreement Expires Soon, War or Peace to Be Revealed This Week
U.S.-Iran Two-Week Ceasefire Agreement Expires
On April 8, the United States and Iran reached their first two-week ceasefire agreement, with the market anticipating a series of positive developments in the future, or at least a reduction in tensions between the two sides.
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On April 22, the two-week ceasefire agreement between the United States and Iran is set to expire. If no new agreement is reached before then, both sides will re-enter a state of war.
Last Sunday, Iran's state news agency reported that Iran would be absent from the second round of negotiations due to excessive U.S. demands, unrealistic expectations, shifting positions, repeated contradictions, and the ongoing maritime blockade. Iran believes that the aforementioned U.S. actions themselves constitute a violation of the ceasefire agreement.
It is highly likely that the United States and Iran will fail to reach a new ceasefire agreement before the 22nd, causing market panic to heat up again. Crude oil will be boosted while gold will come under renewed pressure.
UK and Japan Core CPI Data
Inflation data should never be overlooked, even when the U.S.-Iran war dominates most media coverage.
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This Tuesday, the UK will release its March core CPI year-on-year rate; this Friday, Japan will release its March core CPI year-on-year rate. We know that international oil prices rose significantly in March, so inflation rates in the UK and Japan will be affected.
The most affected is the nominal CPI year-on-year rate, which includes energy price fluctuations. The UK is expected to see a 0.3 percentage point increase, while Japan is expected to see a 0.2 percentage point increase. However, central banks do not place much emphasis on the nominal CPI year-on-year rate due to its poor stability.
For the March core CPI year-on-year rate, the UK is expected to remain unchanged, while Japan is expected to increase by 0.2 percentage points. The impact of high oil prices on both is not significant. As long as high oil prices do not cause core inflation to spiral out of control, central banks have sufficient resolve to maintain their current monetary policies.
Thursday: EIA Crude Oil Inventory Data
This Wednesday at 22:30, the U.S. EIA crude oil inventory data will be released. This is a weekly data point that can be seen every week. As the market is currently focused on international oil prices, changes in EIA crude oil inventories are more important than ever.
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The previous value was a decrease of 913,000 barrels, with an expected decrease of 1 million barrels, indicating a larger anticipated decline. This is partly related to the current blockade of the Strait of Hormuz, which forces some countries in Europe and Asia to purchase U.S. oil, leading to a decline in U.S. commercial crude oil inventories.
Of course, the impact of data on market movements is far less than that of news. If the United States and Iran reach a new ceasefire agreement, international oil prices may still be boosted by optimism, even if EIA crude oil inventories continue to decline.
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