The USD continues under pressure, oil rallies, equity markets are mixed, and US yields rise amid war impasse and bond jitters. The USD remains under pressure near three-month lows after the Treasury’s decision to increase purchases of longer-dated government debt helped push long-term yields sharply lower and improved broader risk sentiment. While the latest Fed minutes maintained a hawkish tone on inflation, softer U.S. economic data since the July meeting continues to temper expectations for imminent rate hikes. Global equity markets are mixed, with Asian markets advancing while U.S. futures and European equities edge lower. Sentiment remains cautious as the Treasury rally sparked by Scott Bessent’s surprise increase in long-term bond buybacks begins to fade, while rising oil prices revive inflation concerns and volatility in technology shares continues to temper risk appetite. Elsewhere, oil prices rally around 2.5% as escalating U.S.-Iran tensions and continued uncertainty over Strait of Hormuz flows heighten supply concerns. Bitcoin jumps around 5.6%, pushing back above $70,000 amid improved risk sentiment and a weaker dollar, while gold is broadly unchanged as support from dollar weakness is offset by still-elevated longer-term yields. In focus today: Markets will be watching U.S. initial jobless claims and the Philadelphia Fed Manufacturing Survey, alongside Canadian industrial and raw material prices, with the releases expected to provide fresh direction for currency markets.
News Headlines. Trump threatens 'Economic D-Day' for Iran and 'tremendous' consequences for its backers. Bitcoin & Ether surge as Trump urges Congress to pass crypto clarity act. Alibaba shares fall 4% as AI spending drives 75% drop in net income. Bond yields edge higher as traders digest the Treasury debt buyback plan. Oil prices rise as Trump sharpens Iran rhetoric amid talks impasse. The China Evergrande Group founder is given a life sentence. Harold Hamm launches multibillion-dollar plan to drill Argentina shale. The TSX snapped its losing streak as the materials sector jumped the most in six years. The US could cut key tariffs as part of a proposed Canada deal.
In currency markets. Against the USD, G10 currencies remain broadly firmer as the greenback trades near three-month lows following the Treasury’s move to increase long-dated bond buybacks. Sterling is among the stronger performers near three-month highs, while the yen has strengthened away from the key 160 level as lower U.S. yields provide some relief following last month’s coordinated U.S.-Japan intervention.
In commodity markets. WTI +2.56% | Nat Gas -2.35% | Gold +0.01% | Silver +1.67% | Copper -0.70% | Palladium +0.06% | Coffee -0.55% | Cocoa -0.25% | Soybeans +0.30% | Wheat +0.61%
CAD extends its gains, trading near a 10-week high as broad U.S. dollar weakness and rising oil prices provide underlying support for the loonie. Canada-U.S. trade tensions have also eased following the temporary suspension of threatened 50% tariffs while negotiations continue, leaving today’s lower-tier Canadian economic releases unlikely to materially alter the currency’s near-term direction.
EURCAD eases toward 1.6100 as rising oil prices provide additional support for the Canadian dollar. The downside remains contained, however, with the euro supported by persistent Eurozone inflation pressures, expectations for further ECB tightening and strong foreign demand for Eurozone assets.
EUR advances above 1.1700, reaching a fresh three-month high as lower U.S. Treasury yields and the Treasury’s expanded bond-buyback program continue to weigh on the dollar. The euro is also supported by expectations for a September ECB rate hike following sticky Eurozone inflation, with today’s ECB meeting minutes the next focus for policy guidance.
GBPEUR edges higher in early trading, with sterling supported by expectations that the BoE could still raise rates later this year as UK inflation remains elevated. Gains are limited, however, as higher Eurozone inflation and rising German producer prices maintain expectations for further ECB tightening, leaving the cross broadly range-bound.
GBP extends its gains above 1.3600 as the U.S. Treasury’s expanded long-dated bond buybacks weigh on U.S. yields and the dollar. UK inflation remains elevated at 2.9%, although signs of a cooling labour market and stable core inflation have tempered expectations for another BoE rate hike later this year.
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