Tensions rose again overnight, in the Middle East, following the Iranian downing of an American helicopter. Trump promised retaliation, for this and also because the peace negotiations were taking ‘far too long’. Oil prices and bond yields edged higher, while stocks went backwards. US inflation confirmed the impact the Middle East crises is having on energy and inflation. US headline inflation rose to 4.2%, although inline with expectations, is enough to worry markets. The US Dollar remained strong, with the EUR trading 1.1550, while the GBP held 1.3370.Commodity currencies remain oppressed by the resurgent reserve, as the AUD toys with 0.7000, while the NZD tests the downside of 0.5800. The Yen is in a precarious state, trading 160.50 and looking ripe for some Bank of Japan intervention. The focus remains the Middle East.
