The USD eases, oil prices rally, while equity markets and US yields are mixed amid stalled peace talks. The USD eases in early trading amid wavering sentiment around U.S.-Iran talks, though ongoing uncertainty continues to underpin safe-haven demand. Markets remain cautious, with geopolitical headlines driving direction and limiting conviction across asset classes. Investors will be focused on a busy week of central bank decisions and key inflation reports, with markets looking for guidance on how policymakers will navigate rising energy prices and their impact on the broader inflation outlook. Global equities are mixed, hovering near record levels as investors balance strong earnings momentum against rising macro risks. U.S. Treasury yields are edging lower, offering some support to valuations, though sentiment remains cautious after a sharp rally through April. Markets are increasingly wary of stretched positioning, with stalled U.S.-Iran talks, elevated oil prices, and upcoming central bank decisions and major tech earnings keeping investors on the defensive. Elsewhere, oil prices are rallying on supply concerns tied to stalled U.S.–Iran talks and risks to flows through the Strait of Hormuz. Meanwhile, gold and Bitcoin are easing as a firmer USD and higher rate expectations reduce demand for non-yielding and risk-sensitive assets. Today sees a light economic calendar, with markets focused on key inflation reports and on interest rate decisions from the BoC, the Fed, the UK, and the ECB this week.
News Headlines. China blocks Meta's $2bn purchase of AI group Manus. Canadian red tape is worse than Trump tariffs, say industry groups. Iranian foreign minister heads to Russia, Trump says 'call us' to negotiate. Oil up almost 3% as US-Iran peace talks stall. China's industrial profit growth quickens even as the war in Iran heightens risks. Hungary's Magyar to meet EU's von der Leyen for talks on EU funds this week. Taiwan says China's sanctions on European arms makers will not hit weapons sourcing. Warsh confirmation set to advance as GOP holdout backs vote. Poilievre demands Carney cap federal deficit at $31Bn ahead of spring economic update.
In currency markets. Against the USD, JPY is flat in early trading, holding above 159.00 as markets await the Bank of Japan policy decision. The yen remains constrained by a steady dollar backdrop and ongoing geopolitical uncertainty linked to stalled U.S.-Iran talks. Focus turns to the BoJ meeting, where rates are expected to be held, with guidance and potential intervention risks in focus.
In commodity markets. Oil prices rally 2%. Natural Gas, Copper & Soybean prices firmed 0.35%. Gold prices retreated 0.45%. Silver prices weakened 1%. Coffee prices slipped 0.25%, and Wheat prices gained 0.75%.
CAD starts its fourth week in positive territory, firming in early trading with underlying support from rallying oil prices. The loonie continues to benefit from resilient domestic data, though gains remain sensitive to broader USD dynamics and risk sentiment. Focus now turns to the Bank of Canada interest rate decision, where policymakers are widely expected to hold rates while maintaining a cautious, data-dependent outlook.
EURCAD eases in early trading as the Canadian dollar finds support from rallying oil prices, while the euro trades more cautiously. The cross is drifting lower as commodity strength underpins the loonie despite a broadly steady backdrop. Focus this week turns to the ECB and BoC interest rate decisions for further direction on policy divergence.
EUR edges higher against the USD, with the single currency reclaiming ground above 1.1700 as improving risk sentiment weighs on the dollar. Optimism around renewed U.S.–Iran dialogue is easing safe-haven demand, supporting the single currency in early trade. Focus now shifts to inflation data and upcoming ECB and Fed policy decisions for further direction.
GBPEUR ticks higher as sterling outperforms, supported by a hawkish repricing of Bank of England expectations amid resilient UK growth and persistent inflation pressures. The euro remains on the back foot following weaker German sentiment data, leaving the cross biased to the upside. Markets' focus will be on the BoE and ECB policy decisions, with markets expecting a hawkish hold from the BoE and ECB guidance to be key for assessing the relative policy outlook.
GBP edges higher against the USD, holding above 1.3550 as a softer dollar and improved risk sentiment underpin the pound. Sterling continues to draw support from firm UK data and expectations of relatively tighter policy. Focus now shifts to the Bank of England this week, where rates are widely expected to be held at 3.75% with a cautious “wait-and-see” stance, while markets look for guidance on inflation risks and the potential for further tightening later in the year
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