- Trump announces two-week ceasefire with Iran
- WTI prices plunge
- The US dollar opens sharply lower across the board.
USDCAD open: 1.3872, overnight range 1.3824-1.3900, close 1.3887, WTI 94.80, Gold 4783.83.
The Canadian dollar traded sharply higher after Trump’s ceasefire announcement on Iran but has already given back roughly half of those gains. The sharp drop in crude prices cuts both ways for Canada. Lower pump prices will help ease inflation pressures, but government revenues tied to energy will take a hit.
WTI prices plunged from 117.63 around midday yesterday to 91.11 during the Asian session before recovering toward 98.85 in New York trading. While a ceasefire may be in place, tanker traffic through the Strait of Hormuz has yet to resume. In addition, damage to Qatari gas facilities is expected to significantly disrupt LNG supply.
At 6:32 pm ET, Trump confirmed he would pause military action against Iran for two weeks, and markets reacted immediately. By 7:10 am, the US dollar had dropped from 99.88 to 98.69, gold caught a bid, and global equity indices rallied sharply.
Asian equities surged, with Japan’s Topix rising 3.32%, Australia’s ASX 200 gaining 2.56%, and Hong Kong’s Hang Seng climbing 3.09%.
European markets followed the lead. As of 7:10 am, the German DAX is up 4.94%, the French CAC 40 has gained 4.56%, and the UK FTSE 100 is higher by 2.88%. S&P 500 futures are ahead 2.64%, the US 10-year yield is 4.234%, the DXY is 98.83, and gold (XAUUSD) is 4,788.50.
Attention now shifts to the March 18 FOMC minutes, which will be scrutinized for clues on whether policymakers are more concerned about inflation or the labour market.
EURUSD rallied in a 1.1599-1.1709 range, surging on the back of ceasefire headlines before settling into a sideways drift around 1.1690. German factory orders rose 0.9% m/m in March, well below the 2.0% forecast but a sharp improvement from the previous -11.1%. Eurozone PPI and Retail Sales offered a mixed picture and were largely ignored.
GBPUSD traded in a 1.3284-1.3446 range after closing at 1.3294 in New York, with gains driven by the broader risk-on tone. Reduced expectations for Bank of England tightening, now seen as just one hike later this year, added support. Halifax House Prices fell 0.5% m/m, missing expectations for a gain.
USDJPY dropped from 159.75 to 158.05, pressured by falling oil prices and stronger wage data. Labour Cash Earnings rose 3.3% y/y, beating forecasts and reinforcing the case for further BoJ tightening.
AUDUSD traded in a 0.6968-0.7065 range, supported by broad US dollar weakness and lower oil prices.
