The Morning Update

The USD moved lower, oil prices are down, equity markets were broadly steady, and US yields edged lower. The USD retraced extending earlier gains as investors increased bets on a potential US-Iran agreement that could end the conflict and ease global trade and energy risks. The same market sentiment is also weighing on crude oil, as expectations for reopening the Strait of Hormuz eased concerns over potential supply disruptions. Precious metals rallied amid a weaker US dollar and improving investor sentiment. Bitcoin lost ground despite investors’ renewed optimism over a potential US-Iran peace deal and strong ETF inflows continued to support crypto sentiment. Market participants are now focusing on tomorrow’s US unemployment figures.

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News Headlines: Hopes for a short-term US-Iran agreement to halt hostilities boosted global risk sentiment, as both sides appeared to be working toward a temporary solution rather than a comprehensive peace plan, raising expectations for a gradual reopening of the Strait of Hormuz and easing supply concerns. France deployed its carrier strike group to the Red Sea on Wednesday as part of preparations for a potential mission to secure the Strait of Hormuz, amid growing concerns over the economic fallout from ongoing US-Iran maritime tensions and blockades. An Israeli air strike killed the son of Hamas chief negotiator Khalil Al-Hayya, as Hamas leaders met in Cairo to discuss efforts to preserve the fragile truce with Israel. British voters headed to the polls on Thursday in local and regional elections widely seen as a key test of Prime Minister Keir Starmer’s government amid growing political pressure and expectations of significant Labour losses.

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In currency markets. Global currency markets were broadly driven by improving risk sentiment, as optimism over a potential US-Iran agreement weakened the US dollar, supported the euro and pound, and eased pressure on oil-sensitive currencies amid hopes of reopening the Strait of Hormuz. Markets were also watching the Swiss franc closely, as the Swiss National Bank reiterated its readiness to intervene against excessive franc strength amid ongoing geopolitical uncertainty

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In commodity markets. Oil prices dropped 2.43%. Natural Gas lost 0.07%. Gold gained 0.91%.  Silver rose 4.1%. Copper is up 0.44%. Coffee slipped 0.76%. Soybean edged 0.04% lower, and Wheat moved 0.65% lower.

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USD/CAD lost some ground as easing Middle East tensions and falling oil prices weighed on the Canadian dollar.

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EUR/CAD continued to edge higher as the Canadian dollar faced pressure from lower oil prices, while the euro drew support from improving global risk sentiment.

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EUR continued to be supported by broad US dollar weakness as easing geopolitical tensions and hopes for a US-Iran agreement boosted overall market sentiment.

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GBP/EUR was broadly stable as improving global risk sentiment supported the euro, while steady market conditions helped keep the pound range bound.

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GBP climbed to its highest level since mid-February as easing safe-haven demand for the US dollar and optimism over a potential US-Iran agreement boosted market sentiment.

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