- Trump cancels Iran MOU-launches massive attack
- WTI spikes over 6.0%
- US dollar rises on safe-haven demand
USDCAD open: 1.4160, overnight range 1.4155-1.4209, close 1.4202, WTI 74.84, Gold 4,043.90
The Canadian dollar rallied on the back of surging oil prices and a slight narrowing in the 2 and 10-year CAD/US interest rate spread. Prices also got a bit of support from yesterdays, Stats Canada report that Canada's trade surplus widened to $4.2 million in May, driven by the jump in oil prices along with stronger metal and mineral exports.
WTI crude soared more than 6.0% overnight and is trading in New York at 73.97, a 5.12% gain on the session. Trump also reimposed sanctions on Iranian oil.
Trump has restarted his war with Iran, declaring the interim agreement over after launching a fresh wave of attacks on the country.
Trump also unleashed a rant about Spain, calling the country "terrible people" and instructing Treasury Secretary Bessent to sever all trade ties with Madrid.
Predictably, WTI crude spiked, the greenback found a modest bid, global equities sold off, and the 10-year Treasury yield climbed.
The FOMC minutes from the June 17 meeting are on tap today. Analysts still want to gauge whether the hawkish tone that followed Warsh's press conference was justified.
Asian benchmarks closed mostly in the red, the lone exception being Hong Kong's Hang Seng, which climbed 2.99%. Japan's Topix slid 1.37% and Australia's ASX 200 eased 0.21%.
As of 7:20 am, European bourses are firmly negative, with Germany's Dax off 2.11%, France's CAC down 2.11% and the UK's FTSE 100 lower by 1.89%. S&P 500 futures are pointing 0.88% lower, the 10-year Treasury yield stands at 4.575%, and the DXY reads 101.14.
EURUSD held a cautious 1.1396-1.1432 band as traders weighed the fresh Middle East hostilities against Trump's threat to ban trade with Spain. That threat looks largely symbolic, since Spain belongs to the EU, and a blanket ban would presumably have to extend across the bloc, an unlikely outcome. That helps explain why the pair barely flinched.
Sterling slipped through a 1.3322-1.3371 span as higher oil prices stoked concern over an already fragile domestic economy. Activity was subdued overall, with traders staying cautious around the latest US strikes on Iran and Trump's Spain remarks ahead of the FOMC minutes. GBPUSD intraday technicals remain bullish above 1.3300.
USDJPY pushed through a 161.97-162.56 range as traders looked past intervention risk to focus on escalating geopolitical tension, surging oil prices and rising Treasury yields. Additional support came from Prime Minister Sanae Takaichi's fiscal agenda, which points toward heavier government spending.
AUDUSD consolidated near the middle of its overnight 0.6906-0.6947 band, showing resilience despite the geopolitical backdrop. RBA Assistant Governor Sarah Hunter added hawkish commentary on supply-side inflation risks, raising the odds of further tightening, a message reinforced by the RBNZ's 25 basis point hike to 2.5% on inflation concerns.
