Scotiabank strategists Shaun Osborne and Eric Theoret note the US Dollar (USD) is firmer after President Trump announced a blockade of Iranian ports, with US Dollar Index (DXY) off its Asian highs and still seen within a broader bearish setup. They highlight that higher Oil and weaker stocks and bonds reflect geopolitical tension, but relatively contained moves suggest markets are waiting for clarity on the blockade’s scope and growth impact.

Blockade lifts Dollar but upside limited

"President Trump’s announcement of a blockade of Iranian ports as of 10ET today in response to failed peace talks over the weekend are resulting in predictable moves across asset classes—a stronger USD overall, weaker stocks and bonds and a jump in oil prices."

"While moves across markets are significant, they could be worse."

"While the USD is tracking higher in broad terms this morning, the DXY is trading off its early high in Asian trade which barely exceeded the intraday high (99.2) made Wednesday after Tuesday’s cease fire announcement."

"Technically, this is not a significant bounce in the index at this point and DXY price action overall still leans bearish after last week’s sharp fall."

"There is no question that a sustained period of very high oil prices will be damaging for global growth, with Asian countries bearing the brunt of curtailed Gulf supply."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)