- Oil prices rise as Strait of Hormuz stays closed
- Risk sentiment sours and stock turn lower
- The US opens with safe haven demand bid
USDCAD open: 1.3668, overnight range 1.3660-1.3680, close1.3672, WTI 94.96, Gold 4697.64
The Canadian dollar inched lower as risk aversion crept back into markets, albeit without much conviction. The Strait of Hormuz is still closed, and Iran has grabbed two ships in payback for the US seizing Iranian vessels. There's no shortage of talk about negotiations, but Washington and Tehran aren't actually talking to each other yet, leaving oil prices bid and the dollar firmer.
WTI oil surged from 92.33 to 97.19 before pulling back to 94.10 in early New York trade, with the stalled Iran-US standoff and the Hormuz closure doing most of the heavy lifting.
Stock markets are using the Strait of Hormuz closure as a convenient excuse to book profits from record highs. Tesla (NASDAQ: TSLA) beat first quarter earnings estimates and posted revenue growth, but a 25% jump in planned capital expenditures spooked investors, sending the stock down 3.32% by 6:04 am and dragging other stocks along for the ride.
US weekly jobless claims are forecast to rise 5,000 to 212,000, underscoring that the labour market is holding up just fine. The Chicago Fed National Activity Index for March is also due. Neither number will move markets.
Asian equities closed in the red, with the Hong Kong Hang Seng leading the damage at -0.95%, Japan's Topix off 0.76%, and Australia's ASX 200 down 0.57%.
By 6:45 am, the French CAC 40 was flat, the UK FTSE 100 had shed 0.90%, and the German DAX was down 0.47%. S&P 500 futures are off 0.47%, the 10-year Treasury yield is 4.323%, the DXY is 98.77, and gold (XAUUSD) is 4,690.37.
EURUSD traded between 1.1685 and 1.1714, sitting at the bottom of its overnight range as broad dollar demand and weak data did the damage. German PMI readings across services, manufacturing, and composite all missed, with Trump's Iran war taking the blame. Eurozone Services PMI contracted, though a Manufacturing PMI rise to 52.2 from 51.6 softened the blow.
GBPUSD drifted in a 1.3479 and 1.3510, giving back gains despite solid PMI numbers as rising oil prices soured the mood. April Manufacturing PMI jumped to 53.6 from 51 and Services PMI climbed to 52 from 50.25, though much of that reflects front-loading ahead of Trump war-driven price fears.
USDJPY rose from 159.30 to 159.77, and is at its peak due to a surge in crude oil prices, which easily outweighed Manufacturing PMI climbing to 54.9 from 51.6. Intervention nerves are keeping traders honest, but as long as oil keeps climbing, BoJ selling will find plenty of willing buyers.
AUDUSD traded between 0.7137 and 0.7167, giving up earlier gains as safe haven dollar demand tied to the Strait of Hormuz closure overwhelmed better than expected PMI data.
Canada Industrial Product Price and Raw Materials Price indexes are on tap today.
