Oil prices held firm during Tuesday’s trading (August 11) as hopes for a deal to reopen the Strait of Hormuz faded once again. Brent crude hovered around US$87.70 per barrel after surging approximately 10% over the last four sessions, while WTI traded above US$82.
The surge in oil prices has reignited inflation concerns. US bond yields rose as investors assessed that high energy costs could prolong price pressures, complicating the Federal Reserve’s efforts regarding interest rates.
In currency markets, the yen drew attention after weakening sharply on Monday. The USD/JPY pair moved toward the 159.14–159.17 range, causing the yen to surrender some of the gains achieved following previous intervention. Market participants remain on alert for potential action by Japanese authorities should the depreciation continue.
Tensions surrounding the Strait of Hormuz remain the primary driver of elevated oil prices. President Donald Trump has hardened his stance on demands regarding Iran, while uncertainty persists regarding the full reopening of the shipping lane. This situation has fueled market skepticism regarding reports that an agreement could be reached soon.
Investor focus has now shifted to the US Consumer Price Index (CPI) data due for release on Wednesday, August 12. Consensus estimates project a monthly rise of approximately 0.1% for headline CPI and 0.2% for core CPI. These figures are critical, particularly after weak Non-Farm Payrolls (NFP) data previously reduced the likelihood of a September rate hike.
Newsmaker Analysis: The market faces a renewed dilemma between a weakening US labor market and rising energy-driven inflation. If CPI figures also moderate, the Fed may hold interest rates steady, potentially boosting sentiment for gold and equities. Conversely, a hot CPI reading—combined with Brent crude approaching US$90—could revive expectations of a rate hike, strengthen the dollar, and put pressure on risk assets. (asd)*
Source: Newsmaker.id