- Trump predicts end of Iran war this weekend
- Oil prices plunge over 8.5%
- US dollar ticks lower on improved risk sentiment
USDCAD open: 1.3983, overnight range 1.3959-1.399, close 1.3967, WTI 84.20, Gold 4,226.18
The Canadian dollar is trading with a firmer tone after a volatile 24 hours dominated by the latest twists in Trump’s Iran narrative. Yesterday, USDCAD rose to1.4024 after Trump threatened to hit Iran "hard," only to reverse course when he later suggested that an agreement with Tehran was close at hand.
The resulting US dollar selloff knocked boosted the Loonie, but the move lacked staying power. By the time Europe opened, Loonie sellers were creeping back into the market. Traders appear increasingly reluctant to assign much value to Trump’s declarations that a breakthrough is imminent, having heard similar promises many times before.
Today should be quiet as market participants may prefer to avoid major commitments ahead of next Wednesday’s FOMC decision. The World Cup has provided a convenient distraction.
WTI crude has been on a roller-coaster ride. Prices sank from 93.43 during yesterday’s European session to 83.23 in early New York trading and are at 84.08 in NY trading. The sharp decline reflected market enthusiasm for Trump’s claim that the conflict is effectively over.
Asian equity markets jumped aboard the “Risk-On” train after Trump’s latest claim that his war with Iran is coming to an end. Australia’s ASX 200 surged 1.98%, Japan’s Topix advanced 1.35%, and Hong Kong’s Hang Seng Index rose 1.93%.
As of 7:25 am, the French CAC 40 has climbed 1.78%, the UK FTSE 100 is up 1.12%, and the German DAX has gained 1.60%. S&P 500 futures are up 0.50%, the 10-year Treasury yield is 4.454%, and the DXY sits at 99.74.
EURUSD traded in a1.1557-1.1590 range and continues to attract modest buying interest. Sentiment has been helped by expectations that Trump’s war with Iran may be winding down, as well as by yesterday’s widely anticipated ECB rate increase to 2.25%. The move was prompted by inflation pressures linked to the energy fallout from the Iran conflict. Policymakers expect slower growth alongside higher inflation. Germany’s HICP data matched forecasts at 2.7%.
GBPUSD firmed in 1.3384-1.3426 range while largely ignoring disappointing March GDP data (actual -0.1%, forecast -0.1%, previous 0.3%) and softer April Manufacturing Production figures (actual 0.4% m/m, previous 1.2%). The prospect of lower oil prices from the end of Trumps war in Iran provided support from.
USDJPY rose in a 159.91-160.38 band despite a sharp decline in oil prices, intervention concerns, and expectations for a BoJ rate increase to 1.00% on Tuesday. Traders appear to be paying greater attention to recent US inflation data, including CPI and PPI reports, which have reinforced expectations for another Fed rate hike before year-end.
AUDUSD bounced in a 0.7021-0.7054 range after yesterday’s break above 0.7000 ended a week-long decline. The pair spent the overnight session consolidating those gains. However, the advance still appears corrective in nature while prices remain below 0.7080. The RBA’s decision to pause its rate-hiking cycle continues to limit upside momentum.
Todays data includes The University of Michigan Consumer Sentiment survey .
