The USD holds steady, oil prices rally, equity markets are mixed, and US yields rise amid concerns about Middle East peace talks. The U.S. dollar held steady at the start of the week as investors awaited further developments in U.S.-Iran peace negotiations and this week's key U.S. employment data, which could influence expectations for Federal Reserve policy. Market attention will also turn to comments from several Fed officials, while renewed hostilities in the Middle East and uncertainty over the Strait of Hormuz continue to keep investors in a cautious, wait-and-see mode. Global equity markets were mixed, with U.S. futures pushing higher toward fresh record highs, supported by ongoing strength in AI-related stocks and optimism that a U.S.-Iran agreement can still be reached. European equities traded lower, however, as investors remained cautious amid renewed tensions in the Middle East and uncertainty over the timing and terms of any lasting ceasefire deal. Elsewhere, oil prices rallied as uncertainty surrounding U.S.-Iran peace negotiations and the future reopening of the Strait of Hormuz continued to support energy markets. Gold and bitcoin prices weakened as investors rotated toward risk assets, with resilient equity markets reducing demand for traditional and alternative safe-haven investments. Today's focus will be on the CAD S&P Global Manufacturing PMI and the US ISM Manufacturing PMI, which will drive currency market direction.
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In currency markets. Against the USD, the Swedish krona and Kuwaiti dinar weakened as investors remained cautious amid ongoing uncertainty over Middle East peace negotiations and the outlook for global interest rates. Broader currency markets remained range-bound, with traders continuing to balance geopolitical risks, elevated inflation concerns, and expectations for future central bank policy moves.
In commodity markets. Oil prices rallied 2.7%. Natural Gas & Copper prices strengthened 2.25%. Gold prices tumbled 1.35%. Silver prices & Soybean prices firmed 0.4%. Coffee prices advanced 1%, and Wheat prices gained 0.6%.
CAD eased in early trading as investors continued to digest Friday’s weaker-than-expected GDP report, which showed the Canadian economy slipping into a technical recession and prompted markets to scale back expectations for further Bank of Canada rate hikes. Attention now turns to today’s Manufacturing PMI data for fresh insight into business activity, while ongoing USMCA negotiations, Alberta separation concerns, and a deteriorating domestic growth outlook continue to weigh on sentiment toward the loonie.
EURCAD retested the 1.6100 level in early trading as expectations for further ECB tightening continued to support the euro, while the Canadian dollar remained under pressure following Friday's weaker-than-expected GDP report, which pushed the economy into a technical recession. Attention now turns to today's Canadian Manufacturing PMI data, with softer growth prospects and reduced expectations for Bank of Canada rate hikes continuing to underpin the pair.
EUR traded cautiously in early trading as investors balanced expectations for further ECB tightening against renewed support for the U.S. dollar amid ongoing geopolitical uncertainty in the Middle East. Market attention now turns to today's U.S. ISM Manufacturing PMI data and developments surrounding the proposed U.S.-Iran ceasefire agreement, both of which could provide fresh direction for the pair.
GBPEUR held firm in early trading as softer German retail sales data offered little support to the euro, while sterling remained relatively resilient despite Bank of England Governor Andrew Bailey signalling there is no urgency to raise interest rates. Investors are now looking ahead to Tuesday's Eurozone inflation data, which could provide further clarity on the likelihood of an ECB rate hike later this month.
GBP held steady in early trading as investors balanced ongoing uncertainty surrounding the proposed U.S.-Iran ceasefire agreement against expectations that the Federal Reserve will maintain a restrictive policy stance. Sterling remained supported despite recent comments from Bank of England Governor Andrew Bailey that there is no urgency to raise interest rates, with market attention now turning to today's U.S. ISM Manufacturing PMI data for further direction.
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