The USD firms, oil prices continue to rally, equity markets are down, and US yields are mixed on escalating Mideast tensions. The U.S. dollar holds near 2026 highs, rising for a fourth consecutive session as surging, volatile oil prices fuel fears of a renewed spike in inflation. Elevated energy costs and escalating tensions in the Middle East have bolstered the dollar’s safe-haven appeal and prompted markets to reassess central bank rate expectations. Investors remain cautious ahead of Friday’s critical Core PCE and GDP reports for further direction on U.S. monetary policy. Global equities declined as escalating disruptions to oil transport in the Middle East pushed crude prices higher and weighed on investor sentiment. Asian stocks fell sharply while European markets and U.S. futures also moved lower as Brent crude briefly climbed back above $100 a barrel. Rising energy prices are heightening concerns about renewed inflation and slower global growth, adding pressure to equity markets. Elsewhere, oil prices extended their rally as escalating disruptions to energy transport in the Middle East heightened concerns over global supply. Meanwhile, Bitcoin struggled to regain momentum and remained below $70,000, while gold prices held steady amid ongoing geopolitical uncertainty. Today sees a light economic calendar, with a focus on US Initial Jobless Claims, Building Permits, and Housing Starts, which will help provide direction ahead of Friday's key US Inflation & Growth reports.
In the news. Six tankers attacked in Gulf and Strait of Hormuz. Oil trades close to $100 per barrel after attacks in the Gulf. EU's six biggest economies push for single market watchdog. Hizbollah's war with Israel deepens its isolation in Lebanon. The IEA releases record oil reserves to counter the energy shock from the Iran war. First train to Pyongyang in six years to leave Beijing as neighbours revive link. The US opens unfair trade probes to rebuild Trump's tariff pressure. Canadian pension fund HOOPP says it has the capital to invest in Canada and is awaiting Ottawa's plan. Canadian oil producers say little can be done to boost oil production in the short term.
In currency markets. Against the USD, the Mexican peso firmed as investors continued to favour higher-yielding emerging-market currencies supported by strong capital inflows and Mexico’s relatively high interest rates. Meanwhile, the Chinese yuan eased slightly as broader dollar strength and cautious sentiment weighed on Asian currencies despite ongoing policy efforts to stabilize it.
In commodity markets. Oil prices rallied 5.7%. Natural Gas prices strengthened 4.2%. Gold prices up 0.2%. Silver prices advanced 2%. Copper prices are flat. Coffee & Soybean prices gained 0.9%, and Wheat prices jumped 1.1%.
CAD continues to tread water within a tight range near 1.3600 against the U.S. dollar, edging slightly higher as strengthening oil prices provide support for the loonie. Escalating tensions in the U.S.–Iran conflict remain a key driver for markets, with disruptions to Middle East energy flows pushing crude prices higher and increasing volatility across global markets. Investors are also looking ahead to Friday’s key U.S. data releases — including Core PCE inflation and GDP — which could shape expectations for Federal Reserve policy and broader currency direction.
EURCAD traded flat in early trading as the euro held firm following hawkish ECB commentary, while the Canadian dollar remained supported by strengthening oil prices. The cross stayed range-bound as escalating tensions in the U.S.–Iran conflict continued to drive both energy markets and broader currency sentiment.
EUR holds firm in early trading against the U.S. dollar, with EUR/USD hovering near 1.1550 despite broader dollar strength linked to rising energy prices and Middle East tensions. Hawkish comments from ECB officials suggesting the possibility of future rate hikes have provided some support to the euro. However, escalating geopolitical risks and higher oil prices continue to underpin safe-haven demand for the greenback.
GBPEUR traded slightly softer as markets reassessed Bank of England policy expectations following the recent surge in oil prices. Analysts warn that markets may have become overly hawkish on the BoE outlook, with rate cuts largely priced out for the year. Sterling remains sensitive to energy price moves, with any easing in geopolitical tensions potentially offering support to the euro against the pound.
GBP holds steady against the U.S. dollar, trading near 1.3400 as markets balance renewed dollar strength against shifting expectations for Bank of England policy. Rising tensions in the Middle East and higher oil prices have supported safe-haven demand for the greenback, keeping sterling’s gains limited. Investors remain focused on geopolitical developments and upcoming U.S. economic data for further direction.
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