The USD firms, oil prices drop, equity markets are mixed, and US yields ease amid ongoing uncertainty over Iran. USD rises to a six-week high as markets price in the prospect of higher U.S. interest rates amid persistent inflation concerns linked to the Iran conflict. Ongoing uncertainty surrounding the war and disruption risks around the Strait of Hormuz continue to support safe-haven demand for the dollar. Investors now turn their attention to the Fed minutes for additional guidance on the outlook for U.S. monetary policy. Global equities are mixed, with Asian markets under pressure while European equities and US futures move higher. Sentiment has stabilized as bond yields retreat from recent highs, with investors cautiously returning to risk assets ahead of Nvidia earnings. Markets remain sensitive to inflation and growth concerns tied to the Iran conflict, while ongoing uncertainty around global interest rates keeps volatility elevated. Elsewhere, oil prices weaken as hopes for renewed progress in U.S.–Iran negotiations ease immediate supply concerns around the Strait of Hormuz. Gold prices are also slipping as a firmer USD and elevated bond yields reduce demand for non-yielding assets, while Bitcoin firms modestly on improving risk sentiment and easing energy-driven inflation fears. Today sees a quiet economic calendar, with investors focusing on the FOMC Minutes for intraday direction.
New Headlines. China's Xi warns of 'law of the jungle' at Putin summit. NATO allies press the US for clarity on troop cuts in Europe. Iran threatens to extend the conflict 'beyond the region' if the US and Israel resume attacks. Treasury yields inch lower as bond markets price 'significant' inflation risk. The EU clears the way to finalize US trade pact - and avoid Trump tariff hikes. Putin-Xi talks revive stalled Russian gas pipeline as the war in Iran rattles energy markets. Over 47,000 Samsung Electronics workers set to strike as wage talks break down, sending shares lower. 'Keep it Closed' Windsor Mayor doesn't want Canada to accept 'bad' trade deal just to open the Gordie Howe bridge.
In currency markets. Against the USD, JPY remains under pressure with USD/JPY holding near 160.00 as rising US Treasury yields and growing Fed rate-hike expectations continue to support the dollar. Persistent uncertainty surrounding the Iran conflict and elevated energy prices are also weighing on the yen. Markets remain alert to the risk of official intervention from Tokyo should volatility increase further.
In commodity markets. Oil & Coffee prices tumble 1.7%. Natural Gas prices weaken 1.25%. Gold prices retreated 0.5%. Silver prices advanced 0.8%. Copper & Wheat prices gained 0.6%, while Soybean prices eased 0.15%.
CAD remains under pressure against the USD, with the loonie falling to a fresh five-week low after softer-than-expected Canadian inflation data reduced expectations for further Bank of Canada tightening. Broad USD strength and ongoing uncertainty surrounding the Iran conflict continue to weigh on sentiment. Weakening oil prices are also adding additional pressure to the commodity-linked currency.
EURCAD edges higher in early trading as the Canadian dollar weakens alongside softer oil prices. The loonie also remains under pressure after softer Canadian inflation data reduced expectations for further Bank of Canada tightening. Meanwhile, the euro continues to find support from hawkish ECB rhetoric, with markets increasingly pricing in a June rate hike if energy-driven inflation pressures persist.
EUR remains under pressure against the USD, with EUR/USD trading near the 1.1600 level as rising US Treasury yields and renewed risk aversion continue to support the dollar. Persistent uncertainty surrounding the U.S.–Iran conflict is underpinning safe-haven demand, while markets increasingly scale back expectations for Fed rate cuts this year. Focus now turns to the FOMC minutes later today for further guidance on the Fed’s policy outlook and inflation risks.
GBPEUR edges lower following softer-than-expected UK inflation data, which has reduced expectations for aggressive Bank of England tightening this year. The pound came under pressure after UK CPI eased to 2.8% in April, while the euro remains supported by increasingly hawkish ECB rhetoric. Markets are now focused on upcoming PMI data and growing expectations that the ECB may be forced to raise rates in June if energy-driven inflation pressures persist.
GBP remains under pressure against the USD, with the pound straddling 1.3400 despite softer-than-expected UK inflation data. The pound continues to be weighed down by broader USD strength, risk-averse market sentiment, and ongoing UK political uncertainty, while markets increasingly lean toward a more dovish BoE outlook. Focus now turns to the FOMC minutes later today, alongside upcoming UK PMI and Retail Sales data later this week.
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