The USD is steady, oil prices ease, equity markets are up, and US yields rise amid Middle East unrest and looming AI earnings. The U.S dollar is holding broadly steady as escalating U.S.-Iran tensions keep investors cautious, with safe-haven demand offset by softer recent U.S. inflation data. Markets remain focused on the conflict's impact on oil prices and inflation, while expectations that the Federal Reserve will keep rates unchanged this month continue to limit broader moves in the greenback. Global equity markets are mostly higher, with U.S. futures rebounding as the recent selloff in chipmakers eases and investors look ahead to Big Tech earnings for signs that AI spending remains resilient. European markets are mixed and Asian equities edged lower, while easing oil prices and improving risk sentiment have helped offset ongoing concerns over U.S.-Iran tensions and disruptions in the Strait of Hormuz. Elsewhere, oil prices have eased as diplomatic efforts to contain the U.S.-Iran conflict reduce immediate supply concerns, while gold has firmed on continued safe-haven demand. Bitcoin is trading lower as investors trim exposure to risk assets ahead of a busy week of Big Tech earnings and central bank developments. Today's sees a light US economic calendar, in Canada investors will be focused on the key inflation report for direction.
News Headlines. Oil touches $90 as Iran hits tankers. Coffee drinkers turning to whole bean as prices soar, says Lavazza. Lockheed to build cheaper Patriot missile to counter drone threat. Andy Burnham to become the new UK PM and lays out '10-year plan' for the UK in No 10 speech. Iran and US widen attacks, raising fears for Gulf shipping and water supplies. Conflicts and aircraft orders in focus as Farnborough airshow kicks off. AliExpress hit with $129 million EU fine over sales of illegal and counterfeit products. Trump again threatens tariffs over smoke after sitting with Market Carney.
in currency markets. Against the USD, the Australian and South African dollars are outperforming as improving risk sentiment and firmer commodity prices support higher-beta currencies, while the Norwegian and Swedish krona are easing modestly as softer oil prices and a steadier U.S. dollar temper demand for the Scandinavian currencies.
In commodity markets. WTI -0.44% | Nat Gas -1.92% | Gold +0.20% | Silver +1.53% | Copper +0.80% | Palladium -0.25% | Coffee -0.23% | Cocoa -1.93% | Soybeans +1.29% | Wheat Flat
CAD is holding steady in early trading after reaching a one-month high last week, supported by narrower Canada-U.S. two-year yield spreads following softer U.S. inflation data and resilient oil prices. Attention now turns to Canada's June CPI report, where economists expect headline inflation to ease to around 2.9% year-over-year from 3.2% in May, while core inflation is expected to remain sticky, with the outcome likely to shape expectations for the Bank of Canada's policy outlook over the coming months.
EURCAD is edging higher as softer oil prices reduce support for the Canadian dollar. Focus today is on Canada's CPI report, with a softer inflation reading likely to reinforce expectations for Bank of Canada easing and support the cross. Attention then shifts to Thursday's ECB meeting, where rates are expected to remain unchanged but policymakers are likely to retain a hawkish bias amid persistent inflation risks.
EUR is trading in a narrow range ahead of Thursday's ECB policy decision, with investors reluctant to take significant positions before the meeting and President Lagarde's guidance. Markets widely expect rates to remain unchanged, but any indication that persistent energy-driven inflation could warrant a September rate hike is likely to underpin the euro, while geopolitical tensions in the Middle East continue to limit broader risk-taking.
GBPEUR is holding just below 13-month highs as sterling continues to draw support from confidence that Andy Burnham's incoming government will maintain fiscal discipline. Attention now turns to Thursday's ECB policy decision, where rates are widely expected to remain unchanged, with investors focused on whether President Lagarde keeps the door open to a September rate hike.
GBP is edging higher against the U.S. dollar as Andy Burnham formally takes office as UK Prime Minister, with markets encouraged by expectations of policy continuity and fiscal discipline under the new government. Sterling's gains remain measured, however, as investors await Tuesday's UK labour market data while ongoing U.S.-Iran tensions continue to support safe-haven demand for the U.S. dollar.
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