Surging Oil Price Takes Command of Everything Else – Currency Thoughts
Surging Oil Price Takes Command of Everything Else
March 9, 2026
(149) At today’s high, the $119.48 peak in West Texas Intermediate oil had leaped by a total 117% in less than three months and was 84% above its closing level on February 27 just before the start of Operation Epic Fury. The price has settled back to $102.4 per barrel currently, still 37% higher than when markets closed in NY this past Wednesday. Hawkish comments from President Trump and the choice of Mojtaba Khamenei as Iran’s next supreme leader have quickly transformed perceptions of the length of the Middle Eastern war, dealing a huge blow to initial hopes that the impact on oil prices might be only moderate and relatively transitory. Traffic through the Strait of Hormuz has ground down to nil, and the reality of a three digit oil price for the first time since the early months of the Ukraine war has breathed fresh momentum into the flight from risky assets.
- Equity markets in Asia this Monday plunged 7.2% in Vietnam, 6.8% in Pakistan, 6.0% in South Korea, 5.2% in in Japan, 4.4% in Taiwan, 2.6% in Malaysia, 2.1% in Indonesia, 1.7% in India, and 1.4% in Hong Kong.
- Equities in Euroland‘s four biggest economies show losses from 1.5% in Italy to 2.0% in France so far, and the British Ftse has weakened 1.2%. U.S. SPX, DOW and Nasdaq futures are down around 1.0%, and the Russell 2000 losses are closer to 2%.
- Sovereign debt yields have climbed a dozen basis points in Great Britain, 5-8 bps in France, Italy, Spain and Switzerland, three bps in the United States and Germany and two basis points in Japan.
- Gold and silver price responses, down less than 1%, have been mild compared to other losses.
- Bitcoin, +3.5%, has been a rare winner.
The dollar continued to attract safety-seeking hot money, rising overnight by 0.5% versus the peso, 0.4% against the euro and sterling, and 0.3% relative to the yen .
Several Japanese data reports arrived today. A measure of service sector workers’ perceived perceptions, the current economy watchers index in February (48.9) printed at a 14-month high, but such was accompanied by a marginal dip in expectations to a neutral 50.0 level. Japan’s preliminary January readings in the leading and coincident economic indicators rose to 41- and 11-month highs. The Japanese current account posted a JPY 942 billion non-adjusted surplus in January compared to a JPY 345 billion deficit a year earlier; the surplus in seasonally adjusted terms widened to JPY 3.145 billion from JPY 2.697 trillion in December.
German industrial orders had been projected to drop noticeably in January after back-to-back increases of 6.7% in November and 6.4% in December, but not nearly as much as the 11.1% plunged announced today. The 12-month rise in orders sunk to 3.7% in January from 11.7% the month before. German industrial production fell 0.5% in January and was 1.2% below its year-earlier level.
The State Bank of Pakistan had previously cut its benchmark interest rate from 22% in mid-2024 to 10.5% by the end of 2025 including a 50-basis point cut this past December but understandably held its fire at its second policy review of 2026 today, observing that “the macroeconomic outlook has become quite uncertain following outbreak of the war in the Middle East.” After descending from over 38% in May 2023 to a mere 0.3% by last April, Pakistani CPI inflation had rebounded to 5.6% at the end of last year and 7.0% in February before the onset of Epic Fury. Policymakers “noted the high degree of uncertainty in the outlook for international commodity prices and supply-chain disruptions in the backdrop of the war in the Middle East. In this context, the MPC deemed
today’s decision as appropriate, and reaffirmed its commitment to ensure the hard-earned price stability.”
Price data reported today were led by Chinese consumer prices and producer prices. The surprisingly steep acceleration of the CPI to a 2-year higher year-on-year pace of 1.3% included an 83-month high core consumer price inflation rate of 1.8% in February versus 0.8% in the previous month. Chinese producer price inflation has been below zero percent since October 2022, but February’s reading of -0.9% was its least deflationary observation in 19 months.
Norwegian producer prices recorded a 9.4% plunge in the year to February, having risen 22.5% over the previous twelve months ending in February 2025. Lithuanian consumer price inflation increased by a half percentage point in February to 3.6% from January’s one-year low of 3.1%. In Mongolia, CPI inflation declined a full percentage point to a 13-month low of 6.5% last month. Angolan CPI inflation of 13.4% in February was its lowest pace in 31 months.
Investor sentiment toward the euro area economy swung from a 7-month high in February of +4.2 to a two-month low this month of -3.1.
Swiss consumer confidence in February matched January’s 14-month high but still had a negative reading (-30).
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Chinese CPI and PPI, German industrial production and industrial orders, State Bank of Pakistan
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