- Trump rejects Iran plan to reopen Hormuz
- Treasury yields continue to rise on inflation fears
- US dollar opens mixed but has a bullish bias
USDCAD open: 1.4162, overnight range 1.4142-1.4165, close 1.4142, WTI $95.84, Gold $4,157.18.
The Canadian traded lower due to deteriorating risk sentiment and widening CAD/US interest rate differentials moving further in the US dollar's favour. The CAD/US 10-year yield spread widened to -129.6 today from -124 on Friday.
The ongoing Ottawa-Washington trade tensions are another weight on the loonie with a series of US tariffs on Canadian goods set to take effect tomorrow.
WTI oil traded in a $92.70-96.53 range before easing to $95.75 in early New York trading. Trump and Iran appear to have reached an impasse, while Houthi attacks on Saudi Arabia and continued disruption to Red Sea shipping are adding to supply concerns.
Iranian Foreign Minister Araghchi arrived in New York saying his objective was to pursue peace and proposed a seven-day ceasefire linked to reopening the Strait of Hormuz. Trump rejected the proposal, saying the terms might have been acceptable a year ago. However, he still intends to hold talks later this week.
Asian equity markets finished mixed. The Hang Seng climbed 0.54% and the ASX 200 added 0.17%, while Japan's Topix declined 0.40%.
As of 7:30 am, France's CAC-40 was up 0.30%, the UK FTSE 100 had gained 0.22% and Germany's DAX was unchanged. S&P 500 futures were down 0.46%, the 10-year Treasury yield was 5.225%, the DXY stood at 101.10 and gold was trading at $4,150.29.
EURUSD traded in a 1.1371-1.1391 range, with the early rebound running into resistance from higher oil prices, weaker risk sentiment and recent US economic data that has encouraged markets to price at least three additional Fed rate hikes by March.
GBPUSD traded in a 1.3224-1.3274 range, initially edging higher in Asia before surging to its session peak during early European trading. Sterling received a lift after Bank of England Deputy Governor Dave Ramsden said interest rates could need to rise if inflationary pressures continue to intensify. The comments offered little that was genuinely new, however, and GBPUSD has since retreated toward the middle of its overnight range in early New York trading.
USDJPY traded in a 156.52-157.86 range, rising from Friday's 157.28 close to the session high as US Treasury yields and oil prices moved higher. The rally then ran into some well-timed verbal intervention from Japan's Vice Finance Minister Atsushi Mimura, who warned that Japan's prime minister, finance minister and the US had delivered a very clear message to markets. That was enough to send USDJPY bulls rushing for the exits.
The US and Canadian data calendars are empty.
AUDUSD traded in a 0.7007-0.7030 range, with the Aussie once again playing defence ahead of tomorrow's widely anticipated RBA rate hike. Positioning ahead of the decision is having a greater influence on the pair than the day's broader price action. Higher oil prices have also weakened risk appetite, adding another headwind for AUDUSD.
