- Trump pauses Operation Freedom-says deal is close
- Axios reports a US and Iran MOU close to being signed
- The US dollar plunges across the board.
USDCAD open: 1.3590, overnight range 1.3578-1.3623, close 1.3620, WTI 93.12, Gold 4,703.52.
The Canadian dollar rallied after a Trump post claiming significant progress toward a final ceasefire agreement with Iran. It was enough to flip the switch on global risk appetite. The mood got another leg up after Axios reported that Washington and Tehran were close to putting pen to paper on a memorandum of understanding to bring the regional conflict to a close.
The greenback retreated against most majors on the headlines, though the Canadian dollar lagged the broader advance. The loonie's underperformance reflects the weight of its own baggage with CUSMA trade negotiations likely acting as a drag on any meaningful USDCAD downside.
Crude took a beating overnight, with WTI shedding 11.4% to change hands at $90.94 in New York as traders unwound long positions in response to the ceasefire optimism. The technical picture turns significantly more uncomfortable if WTI loses the $86.50 handle.
With the prospect of a Middle East resolution pulling energy prices lower, the market's attention is likely to rotate back toward the Fed. JOLTS job openings data is due today, with consensus looking for a rise to 99,000 from April's 62,000 print.
Asian equity markets closed sharply higher. Australia's ASX 200 climbed 1.30% and Hong Kong's Hang Seng added 1.22%. Japan's Topix ended the session largely unchanged.
European markets were in full advance by 7:10 am ET, with Germany's DAX up 2.97%, the French CAC 40 higher by 3.15% and London's FTSE 100 gaining 2.33%. S&P 500 futures were pointing 1.01% higher ahead of the open. Elsewhere, the 10-year Treasury yield sat at 4.339%, the DXY was changing hands at 97.69 and spot gold was at $4,712.90.
EURUSD climbed in a 1.1692-1.1778 range, advancing in two waves -- first on Trump's announcement of the Operation Freedom pause, then again after the Axios peace report hit. The geopolitical tailwind was strong enough to overshadow a deteriorating set of April PMI prints, with the eurozone Composite sliding to 48.8 from 50.7 in March and Services dropping to 47.6 from 50.2, both firmly in contraction.
GBPUSD rose in a 1.3539-1.3634 range as ceasefire optimism pulled the dollar broadly lower and risk appetite returned. Domestic politics could cap the gains, however, with the Starmer government facing a difficult set of local election results that may stoke fresh debate about the direction and durability of his government.
USDJPY drifted in a 155.04-157.94 range through the bulk of Asian dealing before a sharp, sudden reversal pointed strongly to BoJ intervention , although it was not confirmed. The pair has since settled near session lows, with the improving global risk tone providing an additional headwind for the dollar.
AUDUSD gained in a 0.7178-0.7268 range, benefiting from the global shift toward risk appetite and the lingering boost from the RBA's decision to raise rates on Tuesday. In addition, a newly announced bilateral agreement between Australia and Japan covering defence cooperation, energy security and critical minerals supply chains provided additional support.
