- Cautious optimism ahead of US and Iran peace talks on Saturday.
- Oil prices are steady as some ships transit Strait of Hormuz
- The US dollar is trading cautiously but modestly higher
USDCAD open: 1.3836, overnight range 1.3813-1.3844, close 1.3816, WTI 98.62, Gold 4751.52.
The Canadian dollar was rangebound in the 1.3806-1.3875 range following Trump’s reversal on his threat to destroy a civilization. Tensions between the US and Iran remain elevated as Israel continues strikes in Lebanon, as Iran believes Lebanon is part of the ceasefire agreement.
The Canadian dollar is taking direction from oil. WTI traded in a 97.59-100.40 range ahead of Saturday’s US and Iran peace talks in Pakistan. Seven vessels have sailed through the Strait of Hormuz in the past 24 hours, which suggests the waterway is technically open.
The Loonie is unlikely to react significantly to the Canadian Labour Force Survey, which is expected to show a 15,000 job gain in March after a loss of 83,900 in February.
Today’s focus is on US CPI, which is forecast to rise to 3.4% y/y from 2.4%, with core-CPI at 2.7% from 2.5% and monthly CPI seen at 0.9%. A US trade court ruling on the legality of the 10% global tariff introduced February 24 is also due. Trump’s Iran war and the closure of the Strait of Hormuz drove oil sharply higher, which will be reflected in the CPI results.
EURUSD traded in a 1.1677-1.1713 range, initially drifting lower before rebounding into the New York session after German inflation data met expectations, with HICP rising 2.8% y/y. The single currency continues to draw support from expectations for ECB rate hikes in June and September, while price action remains constructive with the pair holding above key support and targeting resistance near 1.1640.
GBPUSD was relatively calm in a 1.3411-1.3443 range, supported by cautious optimism surrounding upcoming US-Iran peace talks and the potential resumption of tanker traffic through the Strait of Hormuz. However, gains are likely to be capped by strong resistance near 1.3490 in the near term.
USDJPY firmed in a 158.95-159.38 band and remained near the highs as elevated oil prices around $100 per barrel offset concerns about tighter monetary policy. Stronger-than-expected producer prices, which rose 2.6% in March versus a 2.4% forecast, helped push 5-year JGB yields to record highs and reinforced expectations of a potential Bank of Japan rate hike, with markets pricing in a 60% probability for the April 28 meeting.
AUDUSD drifted in a 0.7054-0.7088 range, consolidating recent gains as improved risk sentiment supported demand. However, price action continues to be driven by broader US dollar trends and evolving sentiment around US-Iran negotiations, leaving the pair vulnerable to headline-driven swings.
