Fears Lessen about Oil Supply Fallout from Israeli-Iranian Military Conflict – Currency Thoughts
Fears Lessen about Oil Supply Fallout from Israeli-Iranian Military Conflict
June 16, 2025
Israeli missile attacks so far have stayed clear of major Iranian oil production installations. Having soared earlier overnight to as high as $77.4 per barrel, the price of West Texas Intermediate crude settled back to $72.07 for a net decline so far of 1.3%.
The G7 Summit in Alberta, Canada is underway and so far has not produced Trumpian fireworks. Operative phrase is “so far.”
The dollar is fractionally softer, with drops of 0.7% against the Aussie and New Zealand dollars, 0.4% versus the Mexican peso and Korean won and 0.1-0.2% relative to sterling and the euro offset by 0.1% upticks vis-a-vis the Canadian dollar and Japanese yen.
Equity markets rose 1.3% in Japan, 0.8% in India and South Korea, 1.1% in New Zealand and 0.7% in Hong Kong. An improving trend extended into European trading, with rises of around 1% so far in France, Italy and Spain. U.S. futures have risen, too.
Ten-year sovereign debt yields have advanced today by 4 bps in the United States, 3 bps in Japan, and 2 bps in the U.K., Italy and Spain.
The price of gold had been as firm as $3,476, just 1% under its record peak but now shows a net 0.5% decline from Friday’s close. The price of Bitcoin is up 1.1%.
Monthly Chinese data for May proved to be mixed. On-year growth of 5.8% in industrial production and 6.4% in retail sales constitute a 6-month low and a 17-month high, respectively. Fixed asset investment over the first five months of 2025 were 3.7% above a year earlier, down from 4.0% on-year increase in January-April. Unemployment eased to 5.0% from 5.1% in April and 5.4% in February. That’s lower than analysts were projected and constitutes a half-year trough.
The New Zealand service sector purchasing managers index slumped 4.1 points in May to an 11-month low of 44.0, signaling a solid pace of contraction.
The U.S. Empire State manufacturing survey index conducted by the Fed dropped to a 3-month low of -16 this month from -9.2 in May. This was the fifth subzero reading in six months.
The British Rightmove house price index was only 0.8% above its year-earlier reading, marking a 10-month low.
Israeli GDP expanded faster last quarter at a 3.5% seasonally adjusted annualized quarterly rate. Year-on-year growth of 2.75% compares favorably to +0.9% in full-2024 and 1.8% in 2023. Sri Lankan GDP growth of 4.8% year-on-year in the first quarter was above zero for a seventh consecutive period.
Hourly labor cost growth in Euroland slowed to a 10-quarter low of 3.4% in 1Q 2025, down from 5.3% in the first quarter of 2024.
Officials at the State Bank of Pakistan, which at the prior policy review in May had cut their key interest rate by a full percentage point to 11.0%, retained that level, which is exactly half has high as the 22.0% peak attained in June 2023 and maintained until an initial cut a year later. 11.0% is its lowest level since April 2022. Consumer price inflation in Pakistan, which had receded from 38% in May 2023 to 0.3% in April of this year, rebounded to a 5-month high of 3.5% last month. Officials are targeting inflation this year at 7.5%.
Indian wholesale price inflation slowed a half-percentage point to a 14-month low of 0.4% in May, undershooting expectations by a half. Food price inflation reached a 19-month low. WPI inflation for factory goods and fuel dropped to 6- and 2-month lows.
The Swiss combined producer and import price index fell 0.5% on month and 0.7% from May 2024, a 5-month year-on-year low. Import prices were 2.9% below May 2024 levels, while domestic PPI inflation rose to 0.4%.
Czech producer price inflation of -0.8% in May was less deflationary than the -1.3% reading in April.
Croatian consumer price inflation in May has been left unrevised at 3.5%, a 3-month high. but well down from the 13.5% peak in November 2022. Bulgarian CPI inflation ticked up to a 2-month high in May of 3.7%.
Italian consumer price inflation in May has been revised 0.1 percentage point lower to show a 0.1% monthly dip and a 12-month 1.6% rate of increase. Core inflation was 2.0% in the latest reported month.
Canadian housing starts had jumped very sharply in April and, at 279.5k in May, continued at nearly April’s elevated level last month.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Euroland labor corsts, Indian WPI, Israeli GDP, State Bank of Pakistan, Swiss PPI
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