The USD holds steady, oil prices tumble, equity markets are up, and US yields fall after Iran-US agree to halt war and reopen Hormuz. The U.S. dollar held steady in early trading as investors balanced optimism over a potential U.S.-Iran peace agreement against caution ahead of Wednesday's Federal Reserve interest rate decision. While easing geopolitical tensions have reduced some safe-haven demand for the greenback, expectations that the Fed will maintain a firm stance on inflation continue to underpin the currency. Markets are now focused on the Fed's policy statement and guidance on the outlook for interest rates through the remainder of the year. Global equity markets moved higher in early trading after the U.S. and Iran agreed to end hostilities and reopen the Strait of Hormuz. The prospect of lower energy prices and easing inflation pressures boosted investor sentiment, with technology stocks leading gains. Attention is now turning to Wednesday's Federal Reserve interest rate decision for further direction. Elsewhere, oil prices tumbled to multi-month lows on expectations that the U.S.-Iran agreement will lead to the reopening of the Strait of Hormuz and a normalization of global energy supplies. Gold prices strengthened as investors continued to hedge against lingering geopolitical uncertainty, while bitcoin prices also moved higher amid improving market sentiment. Today sees a light economic calendar, and we expect markets to be somewhat sidelined ahead of the Fed and BoE interest rate decisions this week.
News Headlines. The US and Iran reach a deal to end the Mideast war, with the agreement set to be signed Friday. SpaceX gains 6% in premarket after record debut. Treasury yields slide as Iran deal drives rethink on Fed Interest rate hikes. The UK to ban social media for under-16s to 'give kids their childhood back'. Russia damages historic Kyiv cathedral in massive missile strike. Lebanon warns displaced against rushing home after US-Iran deal. G7 leaders in France with Trump tariff threat looming. Ahead of the G7, Carney says no single country will characterize the new world order. Anthropic block marks US reversal, warning to Silicon Valley.
In currency markets. Against the U.S. dollar, major currencies rebounded in early trading as easing geopolitical tensions and falling oil prices reduced demand for the safe-haven greenback. Investors also adjusted positions ahead of a busy week for central banks. Markets are now focused on upcoming interest rate decisions from the Federal Reserve, the Bank of England, and the Reserve Bank of Australia for further guidance on the global interest rate outlook.
In commodity markets. Oil prices tumble 5.6%. Natural Gas prices weakened 2.85%. Gold prices strengthened 2.85%. Silver prices rallied 4%. Copper prices gained 0.6%. Coffee prices advanced 1%. Soybean prices slipped 0.35%, and Wheat prices retreated 1.7%.
CAD held relatively steady in early trading but continued to underperform many of its G7 peers as weaker oil prices and a dovish Bank of Canada outlook weighed on sentiment. Markets have scaled back expectations for further BoC tightening this year following last week's policy decision, while uncertainty surrounding the upcoming USMCA review continues to cloud the outlook for the loonie. Investor attention is also turning to this week's Federal Reserve meeting, where any hawkish signals could add further pressure on the Canadian dollar.
EURCAD strengthened through 1.6200 in early trading as the euro remained supported by the ECB's recent rate hike and expectations of further policy tightening. Meanwhile, a weaker Canadian dollar, pressured by softer oil prices and the Bank of Canada's cautious outlook, helped lift the cross to fresh 2026 highs.
EUR strengthens through 1.1600 in early trading as news of a U.S.-Iran agreement to reopen the Strait of Hormuz boosted risk appetite and reduced demand for safe-haven assets. The single currency also remained supported by the ECB's recent rate hike and expectations that policymakers will maintain a relatively hawkish stance in the months ahead. Investor focus is now shifting to Wednesday's Federal Reserve interest rate decision, which is expected to be the key driver for currency markets this week.
GBPEUR eased in early trading as improved risk sentiment following the U.S.-Iran peace agreement and hawkish comments from ECB policymakers provided support for the single currency. Investors are also looking ahead to this week's Bank of England interest rate decision, with markets expected to focus on the policy statement and vote split for clues on the future direction of UK interest rates.
GBP extends gains in early trading as improving risk sentiment, following the U.S.-Iran peace agreement, weighs on demand for the safe-haven greenback. Investors are now looking ahead to a busy week for the pound, with UK employment and inflation data, as well as Thursday's Bank of England interest rate decision, all likely to influence expectations for future policy. Attention will also remain on Wednesday's Federal Reserve meeting, which is expected to be a key driver for currency markets.
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