Last week, the U.S.-China summit went off without a hitch, but the dollar rose once news broke that China had announced it would import U.S. crude oil.
The dollar is being bought and oil prices are rising on the view that President Trump has signaled he will not insist on the Strait of Hormuz.

Now that the U.S.-China summit has concluded smoothly, President Trump is expected to resume his full-scale response to Iran.
He would likely prefer to resolve the situation quickly with the midterm elections in mind, but the reality is that he lacks effective leverage.

He will likely attempt to force Iran to accept the terms of a memorandum for ending the conflict through threats and skirmishes.
However, it is unlikely that Iran will simply accept these terms, and tensions are expected to persist for some time.
Strengthening domestic inflationary pressures in the U.S., as indicated by economic indicators, also contributed to dollar buying.

The USD/JPY pair has reached a level where intervention concerns are warranted; it experienced a mysterious sharp drop—sometimes called an “intervention” or a “rate check”—but
it is now rising strongly against the backdrop of tensions in the Middle East. If you look at dollar-straight pairs and search for buying opportunities, the market should be solid.

Dollar buying is also becoming justified by fundamental factors, and if the stalemate in the Middle East continues, a dollar-buying-focused position would be a safe bet.
Strategies such as buying the dollar during crises and buying crude oil on dips appear to be solid choices.

However, the recent surge in government bond selling, which has pushed yields higher, is a cause for concern.
In both the U.S. and Japan, government bond prices have fallen, driving yields up to near recent highs.

If selling continues and yields rise further, it will likely impact stock prices, which have been hitting new highs.
If bad news continues and leads to a major market correction, it could result in a defeat for the Trump administration in the midterm elections.

It is the fault of the American people who supported such a party and administration, but the rest of the world will be forced to clean up their mess.
An administration that fuels social division—whether in the West or the East—only turns back the clock, which is a real nuisance.

The American people should clean up their own mess.