Silence before the storm? Bloomberg reports on USA-Iran talks
The United States and Iran may be moving again toward a deal that would lead to a de-escalation of tensions in the Middle East.
According to Bloomberg, Washington presented a draft of a document foreseeing gradual unlocking of the Strait of Hormuz and lifting the U.S. blockade of Iranian ports.
Anonymous sources also confirm that detailed negotiations on Iran's nuclear program could be postponed in time, in line with Tehran's expectations.
Donald Trump is, however, facing a difficult task. His statements indicate that he is not willing to accept Iran's nuclear ambitions.
Meanwhile, the energy crisis triggered by the blockade of the strategic transport corridor continues to drive up oil prices and higher bills for consumers, including Americans awaiting the November midterm elections.
It is the coming months that may decide whether the U.S. president can effectively handle the conflict that began at the end of February after the U.S. and Israel attacked Iran.
The commentary on the current tensions between Washington and Tehran in an FXMAG interview was provided by Krzysztof Pawlak, head of the Currency One dealer department.
"The situation in the Middle East remains tense, yet investors want to look for positives a bit "on the force", and consider only scenarios where the worst is already behind us," he noted.
There are currently no mutual missile attacks, and the fragile ceasefire still applies. The biggest problem is that the blockade of the Strait of Hormuz remains a factual state, and transit flows of crude oil or natural gas practically do not work.
No one doubts that the blockade of this narrow choke point in this part of the world will have far-reaching consequences in the form of higher black gold prices for a long time, and consequently significantly affect inflationary pressure.
The expert emphasized that the fuel market remains under pressure, and the key obstacle in the talks remains the issue of Iran's nuclear program.
"We can no longer talk only about a short-term energy shock, since the price of a barrel of oil has been hovering around $100 per barrel for almost two months. It is difficult at this moment to judge whether there is any chance of an agreement between the U.S. and Iran, since the parties differ radically even on uranium enrichment", he added.
Of course, the rapid rise in oil prices permeates the real economy, and producers will pass higher costs onto consumers, which is already happening, causing CPI to rise. In this new environment, central banks will have to find their footing and react to the situation.
There is an increasing vision of raising interest rates in the eurozone, while in the U.S. the stance will be to maintain the cost of money at current levels for the long term. Such a scenario could represent a common currency initiative, which could strengthen against the U.S. dollar.
Moreover, voices are already emerging from the ECB's decision-making body, not ruling out such a move as early as June, to react to the energy shock faster than in 2022, when this central bank was evidently in the starting blocks.
"The key issue remains maintaining the blockade of the Strait of Hormuz; if it continues, the scenario of a more hawkish ECB stance will grow stronger and support euro appreciation. However, we cannot completely rule out conflict escalation and a return to bombings, as investors would again turn to safe havens, thus driving demand for the U.S. dollar, which would be unfavorable for USD/PLN, which would again head north," he summarized.
Read also: Will the dollar surprise again? The expert issued a forecast for USD/PLN and EUR/USD. "I find it hard to believe there will be no more fires."
See also: The dollar's long road to 4 PLN? The expert issued forecasts for USD/PLN and EUR/USD. "The dollar could gain."
Dollar and euro rates on Thursday, May 7
The dollar to zloty rate on Thursday, May 7 is at 3,60 PLN.
Chart. Dollar to zloty rate (USD/PLN)
Source: TradingView.
The euro to dollar rate reaches 1,17 USD.
Chart. Euro to dollar rate (EUR/USD)
Source: TradingView.
Read also: Will the dollar surprise again? The expert issued a forecast for USD/PLN and EUR/USD. "I find it hard to believe there will be no more fires."
See also: The dollar before a "nervous and dynamic" move, will the euro fall? The expert issued a forecast for USD/PLN and EUR/USD.
Source: Bloomberg.
