The USD steadies, oil prices tumble, equity markets rally, and US yields ease as the US and Iran pause fighting. The U.S. dollar is steady against most major currencies after the U.S. and Iran paused attacks, easing geopolitical tensions and sending oil prices sharply lower. Markets are focused on Wednesday's Federal Reserve decision and any further developments in the Middle East, which are expected to be the key drivers of currency markets this week. Global equities are rallying after the U.S. and Iran paused attacks, easing concerns over energy supplies and reducing inflation fears as oil prices retreated sharply. Investors are now turning their attention to a pivotal week of central bank meetings and major technology earnings, with sentiment likely to be driven by Wednesday's Federal Reserve decision and any further developments in the Middle East. Elsewhere, oil prices are tumbling after the U.S. and Iran paused attacks, easing concerns over energy supplies, while gold and bitcoin are advancing as investors position ahead of this week's Federal Reserve decision and other key central bank meetings. In focus today, the US Durable Goods orders and Nondefense Capital Goods Orders ex Aircraft, to guide currency markets intraday.
News Headlines. US pauses Iran strikes as Oman pursues Hormuz transit deal. Chinese chip champion CXMT soars 466% in market debut. Oil falls 8% as Iran and US pause strikes over the Strait of Hormuz. France raises questions over UK participation in EU's Euro 5 billion tech start-up fund. 'Violent' wildfires rage close to French and Spanish cities. China's industrial profits grow at slowest pace this year. Carney calls August by-elections in 3 ridings in Ontario, Quebec & BC. Traffic to start flowing Monday across new bridge between Canada and US. Iran says it still controls strait, not seeking talks, after Trump halts bombings.
In currency markets. Against the USD, currency markets are firming as improving risk sentiment weighs on the greenback following the pause in U.S.-Iran hostilities and the sharp retreat in oil prices. Investors are now focused on Wednesday's Federal Reserve decision for clues on the interest-rate outlook, while continuing to monitor developments in the Middle East that could quickly shift market sentiment.
In commodity markets. WTI -6.84% | Nat Gas -4.60% | Gold +0.61% | Silver +0.98% | Copper +0.61% | Palladium +2.66% | Coffee +1.31% | Cocoa -1.75% | Soybeans -2.77% | Wheat -1.25%
CAD underperforms its peers, slipping in early trading as weaker oil prices weigh on the loonie and improving global risk sentiment reduces demand for traditional commodity-linked currencies. Investors will closely monitor Wednesday's Bank of Canada deliberations alongside the Federal Reserve decision for clues on the policy outlook, before attention shifts to Friday's Canadian GDP report as the next key test of the economy's momentum.
EURCAD advances toward the 1.6100 level as broad-based euro strength combines with renewed weakness in the Canadian dollar, with softer oil prices weighing on the commodity-linked loonie. Investors are now looking ahead to Friday's Canadian GDP report, while stronger Eurozone business confidence and the ECB's relatively hawkish policy stance continue to underpin the single currency.
EUR strengthens against the U.S. dollar as improving hopes for a diplomatic resolution to the U.S.-Iran conflict reduce demand for safe-haven assets and lift overall risk sentiment. Investors are also assessing stronger-than-expected German IFO business confidence data ahead of Wednesday's Federal Reserve decision, while markets continue to monitor energy prices and geopolitical developments for further direction.
GBPEUR eases in early trading as the euro outperforms on improving global risk sentiment and stronger-than-expected German business confidence data, while sterling gives back some of its recent gains. Investors are now focused on this week's Federal Reserve decision and Eurozone inflation and GDP data, with expectations that near-term moves in the cross will be driven by relative central bank policy expectations.
GBP firms against the U.S. dollar as improving risk sentiment and easing Middle East tensions reduce demand for safe-haven assets, weighing on the greenback. Investors are now focused on this week's Federal Reserve and Bank of England policy decisions, with UK retail sales and guidance from both central banks expected to provide the next direction for sterling.
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