Iran's Hormuz offer meets new tanker strikes as an inflation week opens
By Forexuro Desk. Market news and analysis, not financial advice. All articles
Iran says the Strait of Hormuz could reopen within days if Washington accepts its terms, yet more ships were hit over the weekend. Traders return on Monday with Brent near $110 and a week full of inflation data from Canada, the UK, New Zealand and Japan.
Diplomacy and violence ran side by side over the weekend. On Sunday, Iran's foreign minister repeated that the Strait of Hormuz would reopen within days if the United States met the conditions in Tehran's seven day plan, while maritime monitors logged fresh attacks on vessels in and around the waterway. Markets were shut for both developments, so the first real test comes when trading resumes. That test lands at the start of a week packed with inflation releases, all arriving shortly before a crowded run of central bank decisions and the UK Budget.
A reopening offer with strings attached
Abbas Araghchi told Iran's Tasnim news agency that Tehran is still weighing the US response to its proposal, and that its conditions for reopening the strait have not changed, CBS News reported. The plan, first put forward in September, asks the US to end its naval blockade of Iranian ports, lift sanctions on Iranian oil and agree to a ceasefire on all fronts. "If they comply with our conditions, the Strait of Hormuz will reopen on the sixth day, and negotiations will begin on the seventh day," Araghchi said.
The offer was passed to Washington through Qatar, and Araghchi argued that the decision now rests with the US, Investing.com reported. President Donald Trump said the war would end quickly and predicted lower fuel prices once the fighting stops, while Defence Secretary Pete Hegseth warned Iran of further military damage unless it drops its nuclear ambitions. Iran's newly appointed defence minister, Mehrdad Akhlaghi, answered with his own threat of heavy damage to the US and its allies if attacks resume.
For traders, the gap between words and what is happening on the water is the point that matters. An offer is not a reopening, none of the conditions has been accepted, and both sides are still describing the strait in completely different terms.
The attacks did not pause for the weekend
The UK Maritime Trade Operations agency, known as UKMTO, said at least 10 vessels had been attacked in or near the strait since last Sunday, the highest weekly count since the war began in February. It has recorded 23 attacks since the start of the month, almost double the average, according to CBS. On Sunday a tug sailing south off the coast of the United Arab Emirates reported being struck by two unknown projectiles. It was damaged but kept going, and one minor injury was reported.
Iran's Revolutionary Guards said two supertankers hit naval mines on Saturday, setting off fires, and repeated that the strait is closed to any ship without Iranian permission. Those claims could not be independently verified. UKMTO separately reported two tanker attacks off Saudi Arabia on Friday, one of them involving a rocket propelled grenade fired from a small boat.
Washington tells a different story. US Central Command said 97% of vessels trying to cross the strait had done so without being hit by Iranian projectiles, and that it had redirected 138 commercial ships to enforce its blockade of Iranian ports. Further west, the Saudi led coalition said it shot down Houthi ballistic missiles aimed at Khamis Mushait and a drone fired toward Riyadh, and Egyptian President Abdel Fattah al Sisi said Egypt stands ready to defend Saudi Arabia if asked, subject to approval from parliament.
Oil goes into the week near $110
Brent ended Friday at $109.86 a barrel after touching $110 for the first time since May, and US crude settled at $101.41, HDQ noted. Investing.com put Brent's weekly gain at 4.8%, with WTI up more than 10%. A lot of risk was therefore priced in before the weekend headlines arrived.
That leaves the open finely balanced. If traders treat the Iranian offer as a real path to reopening, part of Friday's jump could unwind. If they focus on the mine claims and the rising attack count, the premium has room to build. Either way, oil is likely to set the tone for inflation expectations in the days ahead, which is why this week's data matter more than usual.
The Canadian dollar is not following crude
A jump in oil usually lifts the Canadian dollar, because Canada is a big energy exporter. Last week it helped only a little. The loonie finished Friday at 70.65 US cents, or C$1.4154 per US dollar, its highest close in about three weeks, Grainews reported. HDQ worked out that crude rose roughly twelve times as far as the currency over the week. Part of the reason is at home: Canada lost 68,000 jobs in its latest Labour Force Survey, unemployment rose to 6.5%, and Canadian bond yields have drifted lower since. Our guide to currency correlation explains why a familiar link like oil and the loonie can loosen when interest rates take over.
Monday's September inflation report is the next test. Consensus figures gathered by Monex Europe point to a 0.2% monthly rise that would lift the annual rate to 3.2% from 3.0%, back to the cycle high reached in May. The Bank of Canada's preferred core measures, median and trim, are seen steady at 2.0% and 1.9%. Pump prices spiked to 195 cents a litre in the middle of September, Monex noted, so gasoline should do most of the work. Continuum Economics is a touch softer and expects the headline rate to hold at 3.0%.
Governor Tiff Macklem said in Bangkok on Friday that the Bank has looked through higher energy prices so far, but that this gets harder the longer they last. Policy sits at 2.25%, and the next decision comes on the same Wednesday as the Fed at the end of the following week. Monex still expects a hold unless core inflation surprises, and its medium term view is for USD/CAD to drift back toward 1.43.
How the majors finished
The dollar index ended Friday at 101.78, down 0.28 points on the day, according to Grainews, and Monex estimates it lost roughly half a percent over the week. Hot US inflation figures failed to give the dollar lasting support, because Fed officials pushed back against an immediate hike and a sell off in AI stocks drove money into Treasuries. The CME FedWatch tool put the chance of an October hike at about 17%, Investing.com reported, while markets still price a December move at close to 90%, according to FXStreet.
On our own numbers, the Canadian dollar, Swiss franc, pound and New Zealand dollar each gained between 0.7% and 0.8% on the US dollar, the euro added about 0.3%, the yen barely moved and the Australian dollar lost about 0.55%. Continuum flagged 101.50 on the dollar index as the next level to watch, with 101.30 and then the 101 to 100.75 area below it, though it still describes the move as a pullback inside the dollar's wider uptrend this year.
Gold stuck in its range
Spot gold slipped 0.1% on Friday to settle at $4,165.40 an ounce and futures settled at $4,186.70, with both down 0.7% on the week, Investing.com reported. The pull in both directions was clear. US consumer prices rose 3.7% from a year earlier and producer prices jumped 6.3%, the biggest annual rise since late 2022, which kept Treasury yields high. At the same time, fading bets on an October hike and a rally in government bonds stopped the metal from falling further.
FXStreet sees gold boxed in between $4,100 and $4,200. A break above $4,200 would bring the 100 day moving average near $4,242 into view, while a drop through $4,100 would put Wednesday's low of $4,073 back in focus. The weekend news cuts both ways for gold: more conflict supports demand for safety, but higher oil also feeds inflation fears and keeps yields elevated. Our gold signals guide covers how those forces show up in XAU/USD setups.
What to watch this week
- Monday: Canada's September CPI and the Bank of Canada's Business Outlook Survey. China also releases third quarter GDP, with Monex citing a consensus of 4.4% growth from a year earlier, up from 4.3%.
- Tuesday: UK jobs data. Unemployment is expected to edge up to 5.0% from 4.9%, with total pay growth steady at 3.9%.
- Wednesday: UK CPI, forecast to rise to 3.3% from 3.1%, with core at 2.7% and services at 3.6%. Bank of England Governor Andrew Bailey speaks later in the day. New Zealand's quarterly CPI follows late in the evening in London, with swaps putting the chance of a rate hike to 3.00% at close to 80%.
- Thursday: US weekly jobless claims, covering the survey week for the next payrolls report.
- Friday: Japan's national CPI, where core inflation is seen jumping to 2.1% from 1.7%, followed by flash PMIs for the euro area, the UK and the US.
Sterling has the busiest calendar. Markets treat a quarter point Bank of England hike to 4.00% in November as close to certain, but with 10 year gilt yields above 5.4% and the Budget less than a fortnight away, Monex doubts that hot data would help the pound much. It keeps a bearish sterling view into month end and sees cable risks skewed toward 1.30. For the yen, Monex expects USD/JPY to grind toward 160, where the risk of intervention from Japan's Ministry of Finance becomes the main brake. Our guide to CPI and PPI inflation data explains why a single inflation print can reset rate bets so quickly.
Looking a little further out, the following Wednesday is unusually crowded: the Fed, the Bank of Canada and the Reserve Bank of New Zealand all announce decisions that day, and the UK Budget is due the same day. This week's numbers are the last major inputs before all of it.
What this means for signal traders
- Expect a jumpy open. Weekend headlines from the Gulf can move oil, gold and the yen before most traders can react. Our guide to slippage, gaps and weekend risk explains how stops behave when prices gap.
- Do not trade the first headline. A reopening offer and fresh mine claims point in opposite directions. Early moves in either direction can reverse quickly once confirmed facts arrive.
- Treat CAD pairs with care on Monday. The inflation report lands in the New York morning, and the oil link has been weaker than usual, so USD/CAD may respond more to rates than to crude.
- Mark the UK cluster. Jobs on Tuesday and inflation on Wednesday can move GBP pairs sharply, and spreads often widen around each release.
- Respect the gold range. With $4,100 and $4,200 acting as the edges, stops placed just beyond them are where many traders will cluster. Size positions from the stop distance, not the other way round.
- Keep an eye on USD/JPY near 160. Intervention risk can produce sudden, large moves against the trend.
None of this predicts the next move. It describes the conditions any forex or gold signal will face in the days ahead.
Sources
- CBS News: Iran says Strait of Hormuz reopening conditions still on the table (live updates)
- Investing.com: Tankers hit near Hormuz as Tehran offers US reopening plan
- HDQ: Oil rose 10% this week and the Canadian dollar gained 0.8%
- Grainews: Loonie, crude oil rise to end week
- Monex Europe: Week Ahead, a lighter week coming up for the buck (PDF)
- Continuum Economics: FX Weekly Strategy
- Investing.com: Gold prices slip for the week as oil gains offset weaker dollar
- FXStreet: Gold stumbles as US yields eclipse fading October Fed hike bets
- Price data for the charts: Yahoo Finance (BZ=F daily closes; CAD=X, EURUSD=X, GBPUSD=X, JPY=X, CHF=X, AUDUSD=X, NZDUSD=X at the New York close).
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