The USD steadies, oil prices advance, equity markets are down, and US yields rise amid the ongoing Iran-US stalemate. The USD edges off recent lows but remains under pressure as softer U.S. economic data has reduced expectations for further Fed tightening, with markets pricing in around a 35% chance of a September rate hike. Ongoing U.S.-Iran tensions and the prolonged closure of the Strait of Hormuz continue to provide underlying safe-haven support, while rising oil prices and Treasury yields keep inflation concerns elevated. Global equity markets are lower as rising global bond yields and higher oil prices weigh on risk appetite. Technology and AI-linked shares are leading declines, with U.S. futures and European equities under pressure as renewed U.S.-Iran tensions, persistent inflation concerns and rising borrowing costs temper investor sentiment. Elsewhere, oil prices edge higher on renewed U.S.-Iran tensions and Hormuz supply concerns, while gold and Bitcoin retreat as rising Treasury yields and weaker risk appetite weigh on prices. Today sees a relatively light economic calendar with investors focusing on US ADP Employment Change 4-week average, Building Permits, Industrial Production and Pending Home Sales to help provide intraday direction to currency markets.
News Headlines. Home Depot reaffirms guidance amid 'frozen housing market conditions'. Global bond yields hit multi-decade highs as governments pay the price for US-Iran stalemate. Russia says its economy is strong - it just fired a top economist who warned otherwise. South Korea must brace for a 'worst-case scenario', President Lee says, as Trump cuts military drills. Trump approval falls to 33%, the lowest of his presidency. Iran threatens new offensive while US rules out extending ceasefire deal. Canada home sales rise for fourth straight month in July. Canada braces for 50% US tariffs, with negotiations still far apart.
In currency markets. Against the USD, G10 currencies are generally softer as the greenback rebounds modestly from recent lows. The Kiwi is among the weaker performers, retreating around 0.4% as renewed Middle East tensions weigh on risk-sensitive currencies, while disappointing Chinese activity data—important given China’s role as New Zealand’s largest export market—adds pressure; softer NZ inflation expectations have also tempered the otherwise hawkish RBNZ outlook.
In commodity markets. WTI +0.92% | Nat Gas +0.30% | Gold -0.50% | Silver -1.56% | Copper -1.14% | Palladium -1.08% | Coffee -0.11% | Cocoa -0.56% | Soybeans +0.74% | Wheat +0.76%
CAD holds near two-month highs after Canadian inflation accelerated to 3.0% in July, while underlying inflation remained close to the BoC’s target and home sales rose for a fourth consecutive month, reinforcing signs of improving domestic momentum. However, rising bond yields, softer TSX futures and heightened Middle East uncertainty temper sentiment, while tomorrow’s 50% U.S. tariff deadline on nearly $20 billion of Canadian goods remains the key downside risk.
EURCAD eases slightly in early trading, slipping toward 1.6050 as firmer oil prices and yesterday’s stronger Canadian inflation report provide support for the loonie. The move remains contained, however, as uncertainty ahead of tomorrow’s threatened 50% U.S. tariffs on roughly $20 billion of Canadian goods continues to limit CAD gains.
EUR eases from yesterday’s two-month highs, trading above 1.1550 despite stronger-than-expected German and Eurozone ZEW sentiment data. Improving economic expectations provide some underlying support, although escalating U.S.-Iran tensions and rising global bond yields are limiting the euro’s upside.
GBPEUR slips below the 1.1700 level as softer UK labour-market data weighs on sterling, with private-sector wage growth easing and vacancies continuing to decline, tempering expectations for further BoE tightening. The euro remains comparatively supported, leaving the cross on the defensive ahead of tomorrow’s UK inflation report.
GBP eases toward 1.3500 following softer UK employment data, which reinforced signs of a cooling labour market and reduced expectations for further BoE tightening. Attention now turns to tomorrow’s UK inflation report for further direction on the BoE outlook, while fading expectations for a September Fed rate hike should limit the downside for sterling.
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