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Commerzbank Says Brent Falls Below $88 as US-Iran Diplomacy Continues, Euro Slips

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Brent crude declined to below $88 per barrel as the lull in military strikes between the US and Iran holds while the two sides continue diplomatic efforts, according to Commerzbank in a note.

President Donald Trump said the US is engaged in "very friendly" talks with Iran and expressed confidence that there is a "good chance" of reaching an agreement, according to Commerzbank. Trump reiterated that the US would move "very quickly" to eliminate any nuclear threat posed by Iran.

Trump is also scheduled to meet with Ukrainian President Volodymyr Zelensky to discuss Russia, and with Israeli Prime Minister Benjamin Netanyahu to address Iran and the Abraham Accords.

President Trump reiterated his call for the US to have the world's lowest interest rates. He said Federal Reserve Chair Kevin Warsh "wants to do the right thing" but acknowledged the constraints facing the Federal Reserve Board, added the bank. Trump also argued that costs are declining rapidly, citing the latest inflation data.

Meanwhile, Treasuries weakened ahead of the five-year auction on Monday before stabilizing later in the New York session and finding firmer support during Asian trading on Tuesday, according to Commerzbank.

S&P 500 futures were little changed, Asian equities traded lower and the euro slipped below $1.137, added the bank.

In Asia, Finance Minister Satsuki Katayama said the US and Japan remain aligned on taking foreign exchange measures when necessary, adding that preventing speculative activity in the bond market remains a key priority.

China warned it would take "all necessary measures" if the US moves forward with sanctions targeting Chinese Artificial Intelligence companies.

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