The Morning Update

The USD is steady, oil prices are gaining, while equity markets and US yields are mixed amid developments in Iran and inflation data. The U.S. dollar holds steady just above two-month lows after Friday’s weak payrolls report reduced expectations for a September Fed rate hike. Attention now shifts to Wednesday’s U.S. CPI report for fresh policy clues, while uncertainty over Iran and the Strait of Hormuz keeps geopolitical risks in focus. Global equity markets are mostly higher, holding near record levels as softer U.S. employment data supports expectations for a less aggressive Federal Reserve. Strong corporate earnings and continued optimism surrounding AI investment underpin sentiment ahead of Wednesday’s U.S. CPI report. Elsewhere, oil prices gain as uncertainty over the reopening of the Strait of Hormuz persists, while gold is broadly flat ahead of Wednesday’s U.S. CPI report. Bitcoin eases in early trading following its recent gains. This week’s focus will be on U.S. CPI inflation on Wednesday, followed by UK GDP and U.S. PPI inflation on Thursday, and U.S. retail sales on Friday, with the releases expected to provide fresh direction for currency markets.

‍

News Headlines. China bypasses shipping chokepoints with 'Ice Silk Road' through Arctic. Iran replaces top security official at crucial moment in talks over Strait of Hormuz. Trump is dismantling US guardrails warn former security officials. Putin's war machine scours the home front for recruits. Tehran says US must meet new conditions before reopens strait. Trump hints the US will let economic pressure on Iran do the work. China unleashes $28 trillion capital markets to challenge US in AI. The Canadian government steps in as 'out of control' wildfires force thousands to flee.

‍

In currency markets. Against the U.S. dollar, G10 currencies slip modestly in early trading as the greenback recovers slightly from Friday’s near two-month low. Markets remain cautious ahead of Wednesday’s U.S. CPI report, while uncertainty surrounding Iran and the Strait of Hormuz continues to support the dollar.

‍

In commodity markets. WTI +0.82% | Nat Gas +3.72% | Gold +0.06% | Silver +1.14% | Copper +0.42% | Palladium -0.78% | Coffee -1.93% | Cocoa -0.56% | Soybeans +0.62% | Wheat +1.33%

‍

CAD eases from two-month highs in early trading following Friday’s sharp rally, when stronger-than-expected Canadian employment data showed 75,100 jobs added and unemployment falling to 6.4%. The loonie remains supported by the improved domestic outlook, although renewed Canada-U.S. trade uncertainty is a headwind as negotiations continue over potential tariff relief and broader trade concessions.

‍

EURCAD firms in early trading, holding around the 1.6100 area as improved Eurozone investor confidence supports the euro, while the Canadian dollar gives back some of Friday’s jobs-driven gains. Renewed Canada-U.S. trade uncertainty and firmer oil prices provide competing influences for the loonie, leaving the cross relatively range-bound.

‍

EUR holds steady around the 1.1550 level as improved Eurozone investor confidence provides some support, with the Sentix index rising to 0.9 from -3.1. Gains remain limited by renewed Middle East tensions, while attention shifts to Wednesday’s U.S. CPI report for fresh direction on the Fed policy outlook.

‍

GBPEUR firms above the 1.1650 level as higher oil prices weigh on the euro, given the Eurozone’s reliance on energy imports. Attention turns to Wednesday’s German inflation data, followed by Thursday’s UK GDP and Eurozone industrial production releases for fresh direction.

‍

GBP firms toward the 1.3500 level, gaining against the U.S. dollar despite renewed uncertainty surrounding Iran and the Strait of Hormuz. Attention turns to Thursday’s preliminary UK second-quarter GDP report for fresh clues on the Bank of England outlook, while Wednesday’s U.S. CPI report remains the key external catalyst.

‍