The USD is steady, oil prices are firm, equity markets are up, and US yields are mixed as Middle East tensions offset earnings optimism. The U.S. dollar continues to hold steady as safe-haven demand driven by ongoing U.S.-Iran tensions offsets softer U.S. inflation and expectations that the Federal Reserve will leave interest rates unchanged later this month. Investors are also reluctant to take large positions ahead of a busy week of Big Tech earnings and central bank meetings, keeping the greenback in a relatively tight trading range. Global equity markets are mostly higher as a rebound in semiconductor stocks gathers momentum ahead of a pivotal week of Big Tech earnings. Investors are cautiously rebuilding positions in AI-related shares, with Alphabet's results on Wednesday expected to provide the first major test of whether strong capital spending on artificial intelligence can translate into sustainable earnings growth, while ongoing U.S.-Iran tensions continue to cap broader risk appetite. Elsewhere, oil prices are steady, while gold and Bitcoin edge higher as investors balance ongoing Middle East tensions with improving risk sentiment ahead of key Big Tech earnings. Today sees a light economic calendar with just US ADP Employment Change 4-week average, and comments from ECB Nagel providing direction to markets.
News Headlines. Trump prepares fresh tariff barrage with 10% levies set to expire. The US to hit Canada with 50% tariff on a wide range of goods. Nearly 100 US troops injured in 2 weeks since Iran war resumed. China weighs tighter export controls on AI models and chips. Burnham move to eliminate VAT on electricity bills, sparking funding row. UK PM Burnham surprises Labour MPs by choosing Healey as new chancellor. US strikes Iran and Houthis threaten to block Red Sea shipping route as mediators push 10-day ceasefire. Canada issues air quality warnings over US wildfire smote after Trump tariff threat. GM beats on earnings, raises guidance amid res
In currency markets. Against the U.S. dollar, commodity-linked currencies are leading gains, with the Australian, South African and Norwegian currencies supported by stronger risk appetite and firmer commodity prices, while most major currencies are trading in relatively narrow ranges. Safe-haven demand linked to the Middle East conflict is helping keep the greenback broadly supported, limiting broader moves across the FX market.
In commodity markets. WTI +0.62% | Nat Gas +0.80% | Gold +1.42% | Silver +4.15% | Copper +2.94% | Palladium +1.36% | Coffee +2.39% | Cocoa +0.67% | Soybeans -0.02% | Wheat -0.35%.
CAD is trading modestly stronger, supported by firmer commodity prices and improving risk sentiment, although gains remain tempered by softer Canadian inflation. June CPI slowed to 2.8% from 3.2%, with both headline and core measures easing, reinforcing expectations that the Bank of Canada is likely to keep rates on hold for the coming months, with markets now pricing any further rate hike as a late-2026 possibility rather than an imminent move.
EURCAD is trading broadly flat as softer oil prices weigh modestly on the Canadian dollar while the euro remains supported ahead of Thursday's ECB policy decision. With both the ECB and Bank of Canada expected to keep rates unchanged in the near term, investors are looking for fresh policy guidance to determine the pair's next move.
EUR is holding steady despite stronger German ZEW sentiment data as investors await Thursday's ECB policy decision. Rates are widely expected to remain unchanged, with markets focused on whether President Lagarde signals that persistent energy-driven inflation could keep the door open to a September rate hike, while ongoing Middle East tensions continue to support the U.S. dollar.
GBPEUR is holding just below one-year highs as sterling's recent rally shows signs of fading amid renewed focus on the UK's fiscal outlook under Prime Minister Andy Burnham. Attention now turns to Thursday's ECB meeting, where any hawkish guidance could support the euro and narrow sterling's recent gains.
GBP is slipping modestly in early trading as investors await Wednesday's UK CPI report, which is expected to show a slight easing in inflation and provide fresh clues on the Bank of England's policy outlook. Sterling continues to find underlying support above key technical levels, although caution over the UK's fiscal outlook under the new government is limiting further gains.
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