Middle East Conflict Dominates Global FX, Bond Outlook

The article highlights that the Middle East war and energy price spikes are impacting consumer and business sentiment globally. Iran's foreign minister confirmed the Strait of Hormuz is open to commercial vessels, leading to a steep fall in oil prices and a reduction in expectations for interest rate hikes.

Investors are watching for continued openness of the strait. In the U.S., March retail sales data will reveal the extent of consumer spending weakness, with ING economist James Knightley focusing on core retail sales.

Weak U.S. data increases the likelihood of a Federal Reserve rate cut, with LSEG data showing a 63% chance by year-end. Provisional purchasing managers' indexes for April in the U.S. and Europe will provide updated insights into economic activity.

Inflation data for March from the U.K., Japan, New Zealand, and Canada will gauge the pass-through of higher energy prices into broader consumer prices. Central banks, including the Bank of England and the Bank of Japan, are assessing these inflation trends, while the People's Bank of China and Bank Indonesia are navigating growth and currency stability amidst the energy shock.

Kevin Warsh's confirmation hearing for Federal Reserve Chair is also a notable event.