The USD extends gains, oil prices ease, equity markets are down, and US yields are mixed as markets review risk strategy. The U.S. dollar extends its rally to fresh 2026 highs as investors increasingly price in a Federal Reserve rate hike as early as September, following recent hawkish signals from Fed Chair Kevin Warsh and resilient U.S. economic data. The Dollar Index remains near one-year highs, supported by rising Treasury yields and growing expectations that interest rates will stay higher for longer. Global equity markets are weaker as a sharp selloff in technology stocks weighs on investor sentiment. South Korea's Kospi has fallen more than 10% from its recent record high, while semiconductor and AI-related shares lead declines across major markets. Rising expectations for further Federal Reserve tightening are prompting investors to reassess elevated valuations in growth-oriented sectors. Elsewhere, oil prices continue to ease, down roughly 16% in June, as progress in U.S.-Iran negotiations and improving conditions in the Strait of Hormuz reduce supply concerns. Gold and Bitcoin prices also weaken as rising expectations for Federal Reserve rate hikes and a stronger U.S. dollar weigh on investor sentiment. Investors will be focused on the US PMI reports, with BoC Governor Macklem alongside BoE & ECP speakers to provide intraday direction to currency markets.
News Headlines. Big Tech leads sell-off in global stocks. The UK 'irritated' by EU move delay key summit after Starmer's resignation. SpaceX sheds $400bn in market value as debut rally hits reverse. Burnham poised to succeed Starmer as UK PM. The US and Qatar claim the EU methane rules will trigger a gas supply crunch. Stocks hit by Fed rate reality check and oil prices slip. Nasdaq futures sharply lower as tech sell-off bleeds into global markets; Korea's Kospi falls 10%. Public Storage expands into Canada with $1.2 billion buy. Alberta in talks with Japan on boosting Canadian crude imports. Canada sets out plan for up to 10 new nuclear reactors.
In currency markets. Against the USD, global currency markets come under renewed selling pressure as investors increasingly price in a Federal Reserve rate hike as early as September, supporting broad-based demand for the greenback. The Japanese yen remains near a 40-year low against the dollar, keeping markets alert to the risk of intervention as Japanese authorities continue to warn against excessive currency volatility.
In commodity markets. Oil -0.40% | Nat Gas -1.10% | Gold -0.37% | Silver +0.43% | Copper -0.05% | Palladium -0.67% | Coffee -1.77% | Cocoa +3.68% | Soybeans +0.20%
CAD remains near 14-month lows against the U.S. dollar as investors continue to favour the greenback amid expectations for higher U.S. interest rates and stronger relative economic performance. While stronger-than-expected Canadian inflation data has helped limit losses, a roughly 16% decline in oil prices this month and ongoing USMCA uncertainty continue to weigh on sentiment. Investors are now focused on remarks from Bank of Canada Governor Tiff Macklem later today for further clues on the outlook for inflation, interest rates, and the Canadian economy.
EURCAD is flat in early trading as investors await comments from ECB speakers and Bank of Canada Governor Tiff Macklem for fresh policy direction. Longer term, the bias remains tilted higher for EUR/CAD amid persistent USMCA uncertainty, softer Canadian economic conditions, weaker oil prices, and a relatively more hawkish ECB outlook.
EUR remains under pressure below 1.1450 as softer-than-expected German PMI data and ongoing demand for the U.S. dollar continue to weigh on the single currency. While ECB officials, including Chief Economist Philip Lane, have warned that inflation pressures could remain elevated for longer, expectations for further Federal Reserve tightening and safe-haven demand linked to uncertainty surrounding U.S.-Iran negotiations continue to favour the greenback. Investors are now awaiting U.S. PMI data for further clues on relative economic momentum and the interest rate outlook.
GBPEUR edges higher toward 1.1600 as markets respond positively to Prime Minister Keir Starmer's resignation, with investors viewing the expected leadership transition as orderly and potentially supportive for fiscal stability. Attention now turns to UK PMI data and upcoming comments from Bank of England and ECB officials, which could provide further direction for sterling and the euro.
GBP extends losses toward 1.3200 as weak UK PMI data and growing political uncertainty continue to weigh on sterling following Prime Minister Keir Starmer's resignation. Softer UK economic data and easing inflation pressures have reinforced expectations that the Bank of England will remain on hold, while the Federal Reserve's hawkish stance and ongoing uncertainty surrounding U.S.-Iran negotiations continue to support the U.S. dollar. Investors now await U.S. PMI data for further clues on economic momentum and the outlook for interest rates.
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