NAB Morning Call Underpricing war? Pulling out of the dollar.
Jun 16, 2025
Rodrigo Catril, NAB's market economist and strategist, shares his insights on current market dynamics. He discusses the unexpected optimism around a potential resolution to the Iran-Israel tensions, despite ongoing hostilities. The conversation touches on the significant pullback of central banks from the US dollar and recent economic data from China. Catril also highlights the implications of retail sales trends and the potential impact of upcoming U.S. budget discussions on fiscal policy, setting the stage for a week of market fluctuations.
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Market Optimism vs. Ongoing Conflict
- Markets are optimistic about Iran seeking de-escalation despite ongoing hostilities.
- Israel maintains upper hand and incentive to continue its campaign against Iran's nuclear program.
Risks Behind De-escalation Signals
- Iran's call for a pause may be a tactic to regroup and rally international pressure.
- Netanyahu's comments hint at escalation risks if Iran's leader is targeted.
China’s Trade War Resilience Fades
- China shows resilience despite trade tensions with solid industrial and retail growth.
- However, stimulus-driven retail gains may not sustain, indicating slowing momentum ahead.