Keep an eye on USD/JPY today.
Keep an eye on USD/JPY today. It’s risen another 10 pips in the past few minutes and is up 33 pips on the day to 159.94.
The market is increasingly worried that Trump’s strategy in Iran is a long-term siege and blockade with the Strait of Hormuz potentially closed for months. That’s not a good idea, particularly for US allies who are highly dependent on energy imports, like Japan. Notably, Japan was seemingly able to negotiate the passage of an LNG cargo via Hormuz this week, the first one since the war began.
That suggests some underlying diplomacy with the Iranian side that could be more critical if the war extends. In terms of actual shortages, Japan is in a decent spot as it has huge reserves but pricing is a problem. We are now also firmly into intervention territory as the pair pushes up against 160.00.