The USD is steady, oil prices rally, while equity markets and US yields are mixed amid ceasefire concerns. The USD is steady amid uncertainty over the ceasefire and caution heading into the midweek deadline, with markets broadly adopting a wait-and-see stance. While renewed geopolitical tensions and energy price volatility provide underlying support for the dollar, conviction remains limited as investors weigh the potential for renewed diplomacy. Overall, market sentiment is cautious, with participants balancing fading optimism against persistent geopolitical risks and headline-driven volatility. Global equities are mixed, with Asian markets higher while U.S. futures and European stocks trade lower amid deteriorating risk sentiment. Rising oil prices and renewed tensions around the Strait of Hormuz are weighing on equities, reversing part of the recent rally. Overall, markets are turning more cautious, with geopolitics once again driving direction and limiting risk appetite. Elsewhere, oil prices rally sharply, supported by renewed supply concerns amid escalating tensions around the Strait of Hormuz. Meanwhile, gold prices weaken, and Bitcoin remains broadly steady as markets adopt a more cautious tone. Today sees a quiet US economic calendar ahead of Tuesday's key US Retail Sales and Fed Chair-designate Warsh testimony.
News Headlines. The US Navy seizes an Iranian ship after it breaches the blockade. ECB frontrunner Hernandez de Cos is the most qualified candidate for the top job, economists say. The Russian economy is faltering despite the oil windfall, Swenden warns. Japan issues a tsunami warning after a strong earthquake. Ukraine's drone pilots hit Russian targets from 500km away. US stablecoins pose danger to emerging markets, say central bankers. China sends warships to the Pacific as tensions with Japan grow. Carney says Canada 'faced down threats like this before' amid US trade war. Statistics Canada set to report March inflation data.
In currency markets. Against the U.S. dollar, currency markets are relatively steady, with most G10 pairs trading in tight ranges as investors adopt a cautious, wait-and-see approach. While geopolitical tensions and oil price volatility provide some underlying support for the USD, conviction remains limited. Overall, FX markets are subdued, with participants awaiting clearer signals on the geopolitical and macro front.
CAD trades flat against the U.S. dollar in early sessions as markets adopt a cautious stance ahead of today’s CPI release. While recent price action has been influenced by oil volatility and shifting geopolitical dynamics, focus now turns squarely to inflation data and its implications for Bank of Canada policy. A stronger print could revive rate hike expectations but also raise stagflation concerns, leaving the loonie sensitive to both the data outcome and broader macro risks. Notably, BoC Governor Macklem has signalled that policymakers are not overly concerned about short-term inflation spikes, emphasizing that temporary increases in inflation expectations are not a major concern unless they become persistent.
EURCAD trades cautiously in early sessions, with the pair holding a slightly softer tone as the euro stabilizes while the loonie awaits key domestic catalysts. Focus turns to today’s Canadian CPI release and the Bank of Canada Business Outlook Survey, which are expected to provide clearer guidance on inflation dynamics and policy direction. Near-term moves will be driven by whether the data reinforce tightening expectations or highlight ongoing growth concerns for the Canadian economy.
EUR trades on the defensive in early sessions, with the single currency holding below the 1.1800 level as geopolitical uncertainty supports the U.S. dollar. Renewed tensions in the Middle East are underpinning safe-haven demand, limiting upside despite the pair’s recent rally. Near-term direction remains headline-driven, with markets closely monitoring developments around US-Iran dynamics.
GBPEUR is sidelined in early trading, with the pound under modest pressure amid political uncertainty surrounding Prime Minister Starmer. The euro finds some support from firmer Eurozone inflation data, while broader markets remain cautious amid ongoing US-Iran tensions. With limited UK data, the cross is likely to remain range-bound, with direction driven by political developments and shifting risk sentiment.
GBP holds steady in early trading, with GBP/USD hovering above the 1.3500 level as softer BoE rate expectations and rising political uncertainty offset recent resilience. While the pound has held up relatively well, reduced tightening expectations and scrutiny around Prime Minister Starmer are beginning to weigh on sentiment. Near-term risks remain tilted to the downside, with potential for a deeper pullback toward the mid-1.33s if USD strength persists.
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