- Global markets revert to “risk off”
- Trump says US and Iran ceasefire is on life support.
- The US dollar opens books gains across the board.
USDCAD open: 1.3711, overnight range 1.3672-1.3711, close 1.3680, WTI 101.10, Gold 4,700.11.
The Canadian dollar eased lower, driven by renewed risk-off sentiment after Trump declared the US-Iran ceasefire was on life support. Topside gains are being capped, however, by lingering expectations that the Bank of Canada could raise rates in 2026, a curious view alongside last Friday's employment report and a broader run of data pointing to a weak domestic economy.
The BoC's Q1 Market Participants Survey, published yesterday, canvassed 28 financial market participants including dealers and banks. Respondents identified geopolitics and soft domestic growth as the principal threats to the Canadian outlook, with the majority agreeing that a meaningful easing of trade risks would provide a material lift to the economy.
WTI crude surged from 94.43 yesterday to 101.74 today and is currently testing the upper end of its range. Trump's rejection of Iran's counterproposals was the catalyst, adding a fresh war-premium bid to an already elevated market.
Asian equity markets ended the session mixed. Japan's Topix added 0.30%, Hong Kong's Hang Seng was little changed, and Australia's ASX 200 slipped 0.49%.
April CPI is expected to have dipped to 0.6% m/m from 0.9%, while headline CPI rises to 3.7% y/y from 3.3% in March. Core CPI (ex food and energy) is forecast at 2.7%, compared to 2.6% in March.
Asian equities closed mixed, with Japan's Topix gaining 0.83% while Australia's ASX 200 shed 0.36% and Hong Kong's Hang Seng slipped 0.22%.
As of 7:00 am, the German DAX is off 1.04%, the French CAC 40 has lost 0.59%, and the UK FTSE 100 is down 0.38%. S&P 500 futures are lower by 0.38%, the 10-year Treasury yield sits at 4.434%, and the DXY is at 98.27.
EURUSD dipped in a 1.1739-1.1788 range, as concern over a possible renewal of US-Iran hostilities, potentially involving ground forces, kept pressure on the pair. Germany's ZEW survey showed the current situation deteriorating to -77.8 from -73.7, and while economic sentiment in Germany and the eurozone improved, both readings remained in negative territory.
GBPUSD was the weakest G-10 performer, dropping to 1.3503 from1.3618 under the weight of both geopolitical and domestic pressures. Rising oil prices tied to Iran-US tensions contributed to the selloff, but it was the political uncertainty surrounding Prime Minister Keir Starmer that accelerated the decline.
USDJPY climbed steadily within a 156.79-157.75 range, carried higher by surging oil prices and broad US dollar demand. Treasury Secretary Bessent travelled to Japan, where meetings with the Prime Minister and Bank of Japan officials implied the possibility of joint intervention.
AUDUSD traded defensively in a 0.7209-0.7253 band as souring risk sentiment drove broad-based demand for the US dollar.
There are no Canadian economic reports today.
