- Trump bombs Iran and oil soars
- Carney mends fences with India
- US dollar rallies against the majors, but CAD hangs steady
USDCAD open: 1.3653, overnight range 1.3637-1.3687, close 1.3644, WTI 72.04, Gold 5390.32
The Canadian dollar has held up well despite broad US dollar safe-haven demand triggered by Trump’s strike on Iran. The resilience reflects the sharp rally in gold and oil, commodities that remain central to Canada’s export profile..
Developments in Iran eclipsed Prime Minister Carney’s visit to India, which appears to have delivered results. Carney announced a $2.6 billion uranium supply agreement that Cameco had reportedly been negotiating for several months.
It is also a heavy week for economic releases, highlighted by US nonfarm payrolls and retail sales on Friday. However, the conflict with Iran could blunt the market’s reaction.
WTI crude has surged, touching 74.99 after settling at 69.34 on Friday.
The Strait of Hormuz, the conduit for roughly 20 million barrels of crude per day, is effectively shut. Tankers are backing up at both ends of the narrow channel amid fears of attacks by Iran’s Revolutionary Guard. Major shippers including CMA CGM and Hapag-Lloyd have halted sailings through the passage.
Asian equity markets closed flat to down. Japan’s Topix lost 1.02%, Hong Kong’s Hang Seng fell 2.14% and Australia’s ASX was unchanged.
At 7:30 am, the German Dax fell 2.16%, the French CAC-40 is down 1.92% and the UK FTSE 100 is lost 1.11% S&P 500 futures have dropped by 1.10%, the US Dollar Index is 98.35 and the 10-year Treasury yield is 3.977%.
EURUSD bounced in a 1.1698-1.1796 range. The single currency tumbled during the Asian session before paring part of the decline in Europe. Escalating tensions in Iran dominated sentiment and sidelined otherwise constructive data. Eurozone Manufacturing PMI climbed to 50.8 in February from 49.5, marking a 44-month high. Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank, described the improvement as a broad recovery, noting that six of the eight surveyed countries are now in expansion. In Germany, retail sales disappointed, falling 0.9% m/m in January versus expectations for -0.2% and December’s 1.2% gain.
GBPUSD traded heavily early but rebounded within a 1.3314-1.3456 band as safe-haven demand boosted the US dollar. UK data offered modest support. February Manufacturing PMI printed at 51.7 compared with 51.8 in January. S&P Global said the survey points to a still constructive economic backdrop.
USDJPY climbed from 156.02 to 157.25 amid concerns that surging oil prices tied to the Iran conflict could threaten Japan’s growth outlook. Japanese Manufacturing PMI improved to 53.0 from 51.5, with S&P noting that the recovery in the factory sector is gaining momentum.
AUDUSD slid from 0.7117 to 0.7037 in Asia before trimming roughly half of the decline ahead of the New York open. February TD-MI inflation held steady at 3.6% y/y, while Manufacturing PMI eased to 51 from 51.5. Markets shrugged off the releases.
