The USD is steady, oil prices are weakening, equity markets are up, and US yields are mixed amid optimism over the US-Iran deal. The U.S. dollar steadied but remained on track for a modest weekly decline as investors weighed reports that the U.S. and Iran are nearing an agreement to extend their ceasefire and reopen shipping through the Strait of Hormuz. While easing geopolitical tensions have reduced safe-haven demand for the greenback, stronger U.S. inflation data continues to support expectations that the Federal Reserve will keep interest rates unchanged for an extended period. Global equity markets moved higher, with world stock indices reaching fresh record highs as investors welcomed signs of progress toward a U.S.-Iran ceasefire extension and the potential reopening of the Strait of Hormuz. Gains were also supported by renewed enthusiasm for AI-related stocks, with strong momentum in the technology sector helping to drive advances across Asian and global markets. Elsewhere, oil prices weakened as investors grew increasingly optimistic that a U.S.-Iran ceasefire extension could lead to the reopening of the Strait of Hormuz and a normalization of global energy flows. Gold and bitcoin edged higher as traders continued to balance easing geopolitical risks against lingering inflation concerns and uncertainty about the broader interest-rate outlook. Focus today will be on the German inflation report, CAD GDP, and comments from a flurry of Fed speakers to help provide direction for currency markets.
News Headlines. Russia overspends on Putin's war in Ukraine by $28bn. Blue Origin rocket explodes on launch pad during test. Washington nearing deal to extend Iran ceasefire, US officials say. Anthropic finalizes $65bn funding deal to surpass OpenAI's valuation. Poland rushes to sign contracts for EU defence loans. French economy contracts by 0.1% in first quarter. Netanyahu orders Israeli forces to take control of 70% of Gaza. Oil tumbles, stocks gain on US-Iran deal hopes. Fed's Kashkari says it's too early to call time for rate hikes. A strong Canada 'will help make America great again,' Carney tells New York business leaders.
In currency markets. Against the USD, the Japanese yen remained under pressure near the 160 level, with investors increasingly focused on the risk of further intervention by Japanese authorities. While Tokyo retains substantial foreign exchange reserves, officials continue to rely on verbal warnings and market uncertainty to deter speculative selling, keeping traders alert to the possibility of renewed action if yen weakness accelerates.
In commodity markets. Oil prices tumble 1.5%. Natural gas prices advanced 0.8%. Gold prices gained 0.55%. Silver prices slipped 0.3%. Copper prices eased 0.5%. Coffee prices retreated 0.9%. Soybean and Wheat prices firmed 0.25%.
CAD eased in early trading as investors remained cautious ahead of Friday’s key GDP report, which is expected to provide fresh insight into the strength of the Canadian economy and the future path of Bank of Canada policy. Ongoing USMCA negotiations, Alberta separation concerns, and softer domestic economic indicators continue to weigh on sentiment toward the loonie, leaving it vulnerable against its major peers.
EURCAD edged higher in early trading as the euro remained supported by expectations of further ECB tightening, while the Canadian dollar stayed on the defensive ahead of today's closely watched GDP report. Investors will also be monitoring Germany's inflation data, with both releases likely to provide fresh direction for ECB and Bank of Canada policy expectations, as well as the near-term outlook for the pair.
EUR traded cautiously in early dealings as investors awaited Germany’s latest inflation data and further clarity on the proposed U.S.-Iran ceasefire agreement. While hawkish ECB commentary and expectations for a June rate hike remain supportive for the euro, ongoing geopolitical uncertainty and a resilient U.S. dollar continue to limit upside momentum.
GBPEUR edged lower in early trading as comments from Bank of England Governor Andrew Bailey reinforced expectations that UK policymakers are prepared to tolerate a period of above-target inflation rather than rush into further interest rate hikes. In contrast, expectations for a June ECB rate increase remain firmly intact, supporting the euro ahead of Germany's latest inflation data and widening the perceived policy divergence between the two central banks.
GBP eased in early trading as investors weighed ongoing uncertainty surrounding the proposed U.S.-Iran ceasefire agreement and the implications for broader market sentiment. Sterling also remained under pressure after Bank of England Governor Andrew Bailey signalled little urgency for further policy tightening, while stronger U.S. inflation data and expectations of higher-for-longer Federal Reserve rates continued to support the U.S. dollar.
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