Market movers today
Today at 20:00 CEST, US President Trump will announce his stance on the Iranian nuclear deal. This is particularly important for the oil market as there is a risk of Iran’s oil exports being hit by new sanct ions.
Today is another quiet day in terms of economic data releases. In Sweden, we have multiple releases including the Prospera survey and the Riksbank minutes (see page 2).
In the US, we have tier 2 items including NFIB small business optimism and JOLTS job data. Fed Chair Jerome Powell is due to speak this morning, but he is unlikely to provide more information on a Fed bent on delivering two-three more hikes this year.
Selected market news
Geopolitics is set to take centre stage amidst a light economic schedule, as US President Trump is due to reveal his stance on the Iranian nuclear deal at 20:00 CEST. Worries over Iran sent WTI oil punching through USD70 a barrel for the first time since November 2014.
Robust demand and OPEC-curtailed supply have left the oil market tight and vulnerable to event shocks. Event risk revolves around Trump init iat ing sanctions on Iran , as the US waiver on sanctions is due to expire on the 12 May. Meanwhile, the Venezuelan economy cont inues to be beset by turmoil.
We see a tail risk of sanct ions hitt ing Iranian oil supply or a Venezuelan meltdown, which could send Brent to USD80-85 per barrel. we conduct a sensitivity analysis of the implications of such an oil price spike in the currency domain. Depending on the currency pair, we find both upside and downside risk.
