- Traders are optimistic for a permanent US/Iran ceasefire,
- Oil prices are steady but with bearish outlook,
- The US dollar is trading mixed and little changed from yesterday.
USDCAD open: 1.3774, overnight range 1.3761-1.3782, close 1.3768, WTI 92.34, Gold 4798.31
The Canadian dollar is drifting sideways with a mild bullish tilt as traders sift through the latest twists in the US-Iran conflict. Trump’s remarks yesterday hinting that the war may be nearing its end knocked oil prices lower, lifted equities, and weighed on the US dollar index. The Canadian dollar moved in tandem with that shift.
WTI oil fell to 87.08 in Asia before rebounding to 93.27 and settling at 92.61 in New York trading. Prices have dropped $5.44 over the past five days, fuelling broad-based US dollar selling pressure. Oil traders are leaning on expectations that US-Iran peace talks will gain traction and depress prices further.
Traders appear fatigued by the headlines and, despite Trump’s track record with the truth, are choosing to take his “just about done” remark, yesterday at face value.
Equities reflect that shift. The S&P 500 has clawed back all of its post-Iran strike losses and is once again hovering near record territory. The US dollar index has surrendered most of its war-driven gains, while Treasury yields have retreated from their March highs. Gold is still pushing higher, as concerns linger that elevated oil prices could undercut global growth.
In Asia, equities closed with a positive bias. Japan’s Topix rose 0.40%, and Hong Kong’s Hang Seng added 0.29%, while Australia’s ASX 200 finished unchanged.
As of 7:25 am, European markets are mixed. Germany’s DAX and the UK’s FTSE 100 are flat, while France’s CAC 40 is lower by 0.63%. S&P 500 futures are little changed. The US 10-year yield sits at 4.266%, and the DXY is at 98.24.
EURUSD moved sideways within a 1.1776-1.1802 band. While traders are tempted to price in an end to the Iran-US conflict, conviction remains low. ECB President Christine Lagarde noted that the situation is nudging the economy toward an “adverse scenario,” which assumes sharply higher energy prices, heightened uncertainty, and inflation rising to 3.5%.
GBPUSD held a narrow 1.3545-1.3580 range. The pair found some support from fading war concerns and hawkish rhetoric from a Bank of England policymaker, who warned that higher energy costs could trigger wage pressures and broader price increases. That said, upside was capped after the IMF warned the UK would be the hardest hit among G7 economies from the energy shock, cutting its growth forecast to 0.8% from 1.3%.
USDJPY traded between 158.65 and 159.07, largely tracking moves in oil rather than US yields, which edged slightly lower. Japanese machinery orders surprised to the upside, jumping 13.6% m/m and 24.7% y/y in February, far exceeding expectations of -1.1% and 8.5%.
AUDUSD ranged from 0.7112 to 0.7149, underpinned by a softer US dollar, easing oil prices, and a modest improvement in risk sentiment.
Canada Manufacturing Sales data for February is ahead. The US data includes, Export/Import price index, NY Empire State Manufacturing Index for April and NAHB housing market.
