- Trump says he will declare total victory over Iran in two weeks
- Oil prices drop 6.95%
- US dollar opens cautiously lower
USDCAD open: 1.3937, overnight range 1.3931-1.3960, close 1.3956, WTI 89.10, Gold 4,332.28
The Canadian dollar climbed from its overnight low in early New York trading, bolstered by a modest improvement in risk sentiment from retreating oil prices.
The softer tone does little to offset widening CAD/US two-year rate spreads, which continue to favour the US dollar. The divergence reflects a sluggish Canadian economy keeping the BoC on hold while the Fed may still have rate hikes ahead.
WTI reversed Monday's rally, dropping from 95.21 to 88.81 before steadying around 89.25, as hopes for a durable ceasefire among Israel, the US, and Iran tempered the conflict premium in crude.
Both the Canadian and US economic calendars are empty today.
Global risk sentiment edged higher on Monday as dip-buyers lifted the S&P 500 and NASDAQ, with Trump's assurances of total victory within two weeks adding to the constructive tone. Oil prices pulled back and the US dollar consolidated its recent advance.
OpenAI filed confidentially with the SEC for an initial public offering. No terms were disclosed and the timeline remains uncertain, but the news was enough to nudge tech stocks higher.
Asian equities closed mixed overnight. Japan's Topix gained 1.14%, the Hong Kong Hang Seng slipped 0.37%, and the Australian ASX 200 finished little changed.
As of 7:00 am European bourses are mostly higher. The French CAC 40 is up 0.93% and the German DAX has risen 0.68%, while the UK FTSE 100 lost 0.21%. S&P 500 futures are up 0.49% higher, the 10-year Treasury yield stands at 4.551%, and the DXY is at 99.75.
EURUSD traded quietly in a 1.1527-1.1559 range, with mild support from German Industrial Production which came in as expected. (actual 0.4% m/m). Elevated US Treasury yields capped gains.
GBPUSD chopped around in a 1.3331-1.3392 range. The currency drifted steadily higher on improved risk sentiment. However, lingering political uncertainty and expectations for the BoE to hold rates unchanged next week will keep gains in check. BRC Like-for-Like Retail Sales rose 3.4% y/y in May, fully reversing last month's equivalent decline.
USDJPY traded defiantly in a 160.08-160.28 range as traders appeared to conclude that rising US interest rates in an elevated oil price environment more than offset concerns over BoJ intervention or a rate increase next week.
AUDUSD bounced in a 0.7034-0.7071 band after Australian markets returned from a long weekend, with buyers emerging on the open. Robust Chinese trade data and cautious optimism that the US/Iran and Israel/Iran conflicts may be nearing resolution underpinned the pair. National Australia Bank Chief Economist Sally Auld revised her RBA call, and no longer expects an August rate hike because of slowing domestic growth.
Canadian and US trade data is ahead as well as US existing home sales and wholesale inventories.
