Hit the Road Jack

May 11, 2026

Elias Haddad

President Trump rejects Iran’s peace offer. Crude oil prices up, and USD is mixed. CNH outperforms.

No policy-relevant economic data due today. Check-out our Drivers for the Week Ahead for all the key market shaping themes.

Norway April CPI backs Norges Bank hawkish bias.

Crude oil prices rallied by nearly 6% after US President Donald Trump rebuffed Iran’s response to his proposal to end the war, writing “I don’t like it — TOTALLY UNACCEPTABLE!” Unsurprisingly, USD is firmer mostly against currencies of countries with a negative net energy balance (production minus consumption). Energy-sensitive NOK and CAD are holding up better versus USD.

CNH is outperforming most currencies despite China’s large negative net crude oil balance and roughly 5 million barrels per day of crude imports transiting through the Strait of Hormuz. China’s large strategic crude oil stockpile of nearly 1400 million barrels provides a buffer against supply disruption.

In our view, USD will remain supported partly because stabilizing US labor demand and anchored long-term inflation expectations tilt the macro narrative back toward Goldilocks rather than stagflation. Specifically, we expect the dollar index (DXY) to hold above the lower end of its 96.00-100.00 range that’s held for nearly a year.

NORWAY

Norway April CPI print underscores the Norges bank’s concern that “Inflation is too high and has run above target for several years.” Headline CPI was lower than expected at 3.4% y/y (consensus: 3.5%, Norges Bank: 3.7%) vs. 3.6% in March while underlying CPI matched expectations at 3.2% y/y (consensus & Norges Bank: 3.2%) vs. 3.0% in March.

Last week, the Norges Bank unexpectedly raised rates 25bps to 4.25% and left the door open for another hike by year-end. The swaps curve price in 50% odds of a follow-up rate hike at the next June meeting. USD/NOK is trading near a four-year low around 9.2030 and eyeing psychological support at 9.0000.

CHINA

USD/CNH broke below 6.8000, falling to its lowest level since February 2023. China April CPI and PPI ran hot. Headline CPI and PPI inflation quickened more than expected to 1.2% y/y (consensus: 0.9%, prior: 1.1%) and 2.8% y/y (consensus: 1.8%, prior 0.5%), respectively, on higher energy costs. Core CPI remained subdued at 1.2% y/y vs. 1.1% in March, underscoring still soft domestic demand activity.

In our view, a continued appreciation in China’s currency can help the country shift its growth model towards consumer spending by boosting disposable income through cheaper imports. Bottom line: USD/CNH downtrend is intact.

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