21st April - Deadline Day

Forex

The market was uncertain yesterday, with mixed moves for almost all currencies. The USD pulled back a little of its previous losses on weekend gaps before the market filled some of these, echoing the oil markets that gapped higher over the weekend before falling away a little during the day.

The CAD saw its CPI numbers released lower than expected yesterday, whilst NZD's CPI figures overnight were slightly above expectations. Both had some effect on their respective currencies, but the effect was limited due to the focus on the Middle East.

Today is the last official day of the ceasefire between the US and Iran, with talks scheduled to take place today between the two in Pakistan. Markets will be highly sensitive to any news from the region, whether it is official updates, rumors, or social media posts from Trump. Today is a day where technical and fundamental analysis go out the window and everything is dependent on geopolitical news. I would suggest that any trades today are essentially gambles on the outcome of the peace talks. If it is part of a structured plan with defined risk, then there could be opportunities, but otherwise, the smartest thing to do today is to stay out until a clear outcome is made apparent.

Indices

Yesterday was the first day for close to 2 weeks that indices did not have a positive day. Again mirroring the oil chart, the US indices gapped lower on the Sunday open before recovering some of the losses through the day. As with forex, I would be confident in saying any moves today will be entirely dependent on the US-Iran talks. If there is positive news, the markets could continue up, but I do worry about a mini-bubble being burst if there is significant negative news. The market seems to have already priced in an end to the conflict, and the feeding frenzy of the last two weeks seems to have assumed everything will be resolved during the ceasefire. We could see fireworks if those expectations are proved wrong.

Precious Metals

Both gold and silver have seen falls in price over the past 24 hours. The markets gapped lower but recovered some losses during the day. They have fallen again, however, overnight, so they seem to be under pressure from possible central bank tightening as the oil price fluctuates.

Gold is still caught in the paradox of seemingly winning regardless of the outcome of the talks. Safe-haven demand will rise if talks are unsuccessful, while positive talks should reduce the price of oil and cut the probabilities of US interest rate hikes. I would expect to see interest rate concerns overpower safe-haven demand if talks do not yield an outcome, but as with all markets today, it is very much a 'wait and see' environment.

Todays Market Drivers

• Everything is dependent on the US-Iran talks; every piece of news will be pored over, and every social media post analyzed from both sides.

• GBP claimant count change and average earnings will be released in the morning. Unless it is far from expectations, this should only have a small effect while we wait for larger news.

• USD core retail sales are released later today. Again, this will have an effect, but it will be overwhelmed by bigger news.

• The prospective new Fed Chair, Kevin Warsh, has his confirmation hearing today. This may not have an immediate effect, but it will be significant in the longer term. Language that is more or less dovish than expected could signal future Fed plans for interest rates, which will go back to being one of the main market drivers for all financial markets once there is a resolution to the Iran War. This is one to pay close attention to.