The Morning Update

The USD is unchanged; oil prices rally, equity markets are mixed, and US yields rise amid the US-Iran standoff. The U.S. dollar is flat in early trading as the ongoing U.S.-Iran standoff and uncertainty over the Strait of Hormuz provide underlying support for the greenback. Attention is firmly on Wednesday’s key U.S. CPI report, with the inflation reading expected to shape expectations for the Fed’s September policy decision. Global equity markets are mixed, while U.S. futures edge lower as rising oil prices revive inflation concerns and push global bond yields higher. Investors remain cautious ahead of Wednesday’s key U.S. CPI report, which could provide fresh direction for the Federal Reserve policy outlook. Elsewhere, oil prices rally as hopes for a U.S.-Iran agreement to reopen the Strait of Hormuz fade, with Brent approaching $90 a barrel. Gold edges higher as geopolitical and inflation concerns support demand, while Bitcoin also posts modest gains in early trading. Today sees a light economic calendar, with focus on the ADP Employment Change 4-week average, and US Existing home sales change, with markets mostly sidelined ahead of Wednesday's German and US CPI reports.

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News Headlines. EU border checks double queues at major airports. Hong Kong set to include trading firms in 'big-bang' tax reforms. OpenAi's head of ethics leaves the start-up less than a year after joining. US-Iran standoff sends oil prices up and dents stocks. Gold eases from over two-month highs as rising oil prices could rate outlook. China's car sales extend slide as shift accelerates to overseas markets. US small-business sentiment rises to 11-month high in July, labor shortages a worry. Environment Canada implements new alert system for extreme weather warnings.

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In currency markets. Against the U.S. dollar, G10 currencies are mixed in early trading, with the yen remaining under pressure as the impact of recent intervention fades, while the Australian dollar holds firm following the RBA decision. The broader currency markets remain range-bound ahead of Wednesday’s key U.S. CPI report, while fading hopes for a U.S.-Iran agreement keep geopolitical risks in focus.

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In commodity markets. WTI +1.81% | Nat Gas -1.25% | Gold +0.40% | Silver -0.03% | Copper +1.01% | Palladium +0.37% | Coffee +2.47% | Cocoa -1.60% | Soybeans Flat | Wheat +0.51%

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CAD holds steady near multi-week highs, supported by Friday’s stronger-than-expected employment report, which showed the economy adding 75,100 jobs in July and unemployment falling to 6.4%. Rising oil prices provide additional support for the commodity-linked loonie, while Canada-U.S. trade negotiations remain in focus. Attention also turns to Wednesday’s U.S. CPI report, which could drive broader U.S. dollar direction and provide the next catalyst for the loonie.

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EURCAD extends its decline toward 1.6050 as surging oil prices support the commodity-linked Canadian dollar while weighing on the energy-dependent Eurozone. Fading hopes for a U.S.-Iran agreement and continued disruption around the Strait of Hormuz remain the key drivers.

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EUR slips below the 1.1550 level in early trading as fading hopes for a U.S.-Iran agreement and surging oil prices weigh on the energy-dependent Eurozone. The ECB remains data-dependent after holding rates in July, with policymakers continuing to flag the energy shock as an upside inflation risk and leaving the door open to further tightening if price pressures persist.  Attention now turns to Wednesday’s key U.S. CPI report for fresh direction.

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GBPEUR edges above1.1700 level, reaching a two-week high as fading hopes for a U.S.-Iran peace agreement and rising oil prices weigh on the energy-dependent Eurozone. With the UK and Eurozone calendars relatively quiet, geopolitical developments and energy prices remain the primary near-term drivers.

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GBP consolidates around the 1.3500 level, close to multi-week highs, as traders remain cautious amid the U.S.-Iran standoff and elevated oil prices. Attention turns to Wednesday’s U.S. CPI report, followed by Thursday’s preliminary UK second-quarter GDP data, for fresh direction on Fed and Bank of England policy expectations.