- Trump declares peace with Iran
- Oil prices tumble and gold rebounds
- US dollar ticks drifting lower on safe-haven trade unwinding.
USDCAD open: 1.3972, overnight range 1.3950-1.3992, close 1.3989, WTI 80.19, Gold 4,336.68
The Canadian dollar is a touch firmer today, following Trump's declaration that peace has broken out with Iran. The gains are mostly due to broad US dollar weakness as safe-haven trades were unwound. Gains may be limited because inflation remains a concern in the United States.
WTI crude oil opened sharply lower in Asia, dropping from Friday's settlement of 84.88 to 79.71 before recovering modestly to 80.55 in early New York trading. Further losses are hampered because of uncertainty around how quickly global oil inventories will return to normal levels.
Canada releases housing starts data today, with economists forecasting a decline to 255.1k from 279.3k. Manufacturing Sales are expected to increase 4.6% from 3.0%, while Wholesale Sales are projected to slow to 0.1% from 1.9%.
The U.S. calendar features Industrial Production, Capacity Utilization, and the NAHB Housing Market Index.
Trump tweeted “The Deal with the Islamic Republic of Iran is now complete. Congratulations to all! I hereby fully authorize the toll free opening of the Strait of Hormuz, and, simultaneously herewith, authorize the immediate removal of the United States Naval blockade. Ships of the World, start your engines.”
Global markets responded by dumping the U.S. dollar and oil while piling into equities.
The G-7 is gathering in Evian, France and Prime Minister Carney is expected to express concerns about growing American dominance in artificial intelligence following the White House restricted foreign access to Anthropic's Fable 5 and Mythos models.
It’s a big week for central banks. Monetary policy decisions from the RBA, BoJ, BoE and FOMC are all due. The headline event is Fed Chair Kevin Warsh first meeting as chair on Wednesday.
Asian equity markets embraced Trump's claim of peace with Iran. Japan's Topix surged 3.03%, Australia's ASX 200 gained 1.25%, and Hong Kong's Hang Seng Index advanced 0.50%.
As of 7:10 a.m., European stock markets are higher. France's CAC 40 has climbed 1.11%, Germany's DAX is up 1.21%, and the UK's FTSE 100 is flat. S&P 500 futures have risen 1.29%, the 10-year Treasury yield is 4.436%, the DXY index sits at 99.50, and gold (XAUUSD) is trading at 4,339.39.
EURUSD is trading in a 1.1571-1.1605 range, supported by Trump's peace-with-Iran announcement. The news reduced expectations for another ECB rate hike and traders will hear from a long list of policymakers today, including ECB President Christine Lagarde.
GBPUSD climbed in 1.3405-1.3461 band, and remains in an intraday uptrend while above 1.3400. Trump's declaration of Middle East peace has pushed expectations for any Bank of England rate increase further into the future.
USDJPY dropped then popped in a 159.74-160.23 band as is trading near session highs ahead of tomorrow's Bank of Japan meeting. The BoJ is expected to hike rates which if it does will be anti-climatic. Topside gains are hampered by the persistent threat of intervention.
AUDUSD climbed in a 0.7042-0.7088 range and benefited from the improvement in risk appetite. A convincing break above 0.7090 would open the door toward 0.7150. The Reserve Bank of Australia is expected to leave interest rates unchanged tomorrow, with market attention focused on whether policymakers maintain their hawkish bias.
