The USD steadies, oil prices firm, equity markets are mixed, and US yields rise as markets weigh fragile US-Iran peace talks. The U.S. dollar holds steady near its strongest level in a year as investors monitor ongoing U.S.-Iran negotiations and continue to price in the prospect of higher U.S. interest rates. Expectations that the Federal Reserve could raise rates again this year, combined with resilient U.S. economic data, have helped support broad-based demand for the greenback. The Dollar Index tested 101 in early trading, while speculative positioning in favour of the U.S. dollar has climbed to its highest level in 16 months. Global equity markets are mixed as investors weigh signs of progress in U.S.-Iran negotiations against concerns that much of the positive news has already been priced into markets. U.S. stock futures are mixed as investors assess political uncertainty in the UK following Prime Minister Keir Starmer's resignation announcement. Attention now turns to upcoming U.S. inflation data later this week, which could provide further insight into the Federal Reserve's interest rate outlook. Oil prices edge higher as investors assess ongoing U.S.-Iran negotiations and lingering uncertainty surrounding the Strait of Hormuz. Meanwhile, gold prices slip, and Bitcoin holds steady as markets await fresh geopolitical and monetary policy catalysts. Today sees a light US economic calendar, so we expect investors to focus on the CAD CPI, EU Consumer Confidence, and comments from the ECB President and the Fed's Waller to help provide direction for currency markets.
News Headlines. Keir Starmer steps down as UK prime minister. The US and Iran conduct tense peace talks in Switzerland. Italy open to Germany joining fighter jet project, says Leonardo chief. Trump ally wins Colombia election, heralding pro-market turn. Temperatures to exceed 40C in European heatwave, as three die in France. Ten years on, Brexit disputes still hold back Britain's reconciliation with the EU. India in talks to sell supersonic BrahMos missile to the UAE. Canada solidifies agreement with Australia to buy Arctic Over-the-Horizon radar system. Heavy rain pushes Edmonton, and neighbouring municipalities to urge stop to non-essential water use.
In currency markets. Against the USD, major currencies ease in early trading as expectations that the Federal Reserve could raise interest rates again this year, coupled with ongoing uncertainty surrounding U.S.-Iran negotiations, continue to support demand for the greenback. The Japanese yen remains near a 40-year low against the dollar, keeping markets alert to the risk of intervention from Japanese authorities. Meanwhile, higher-for-longer U.S. interest rate expectations continue to weigh on global currency markets.
In commodity markets. Oil +0.52% | Nat Gas +2.91% | Gold -0.37% | Silver +0.43% | Copper -0.05% | Palladium -0.67% | Coffee -1.77% | Cocoa +3.68% | Soybeans +0.20%
CAD eases further in early trading, holding near 14-month lows against the U.S. dollar as weaker oil prices, subdued domestic demand, and a hawkish Federal Reserve continue to weigh on the loonie. Recent data showed that core retail sales declined for a second consecutive month, reinforcing concerns about underlying economic momentum and reducing expectations for further Bank of Canada rate hikes. Investors are now focused on today's Canadian inflation report, with CPI expected to rise and provide fresh clues on the outlook for interest rates and the broader economy.
EURCAD edges higher in early trading as the euro finds support from the ECB's relatively hawkish stance, while investors await Canadian inflation data, ECB President Christine Lagarde's comments, and Eurozone consumer confidence figures for fresh direction. Longer term, the pair is expected to remain biased higher amid USMCA uncertainty, diverging ECB and Bank of Canada policy paths, and signs of softening economic conditions in Canada.
EUR is little changed near 1.1450 as expectations for higher U.S. interest rates and lingering uncertainty surrounding U.S.-Iran negotiations continue to support the U.S. dollar. The single currency remains underpinned by the ECB's relatively hawkish stance, helping to limit downside pressure. Investors are now focused on comments from ECB President Christine Lagarde for further clues on the Eurozone's inflation outlook and the path of future interest rates.
GBPEUR edges higher toward 1.1550 as sterling benefits from a positive market reaction to Prime Minister Keir Starmer's resignation and expectations of a more market-friendly leadership transition. Investors are also looking ahead to UK PMI data and comments from Bank of England policymakers for further direction, while ongoing political uncertainty in the UK remains a key factor for sterling sentiment.
GBP edges up above 1.3200 as markets take Prime Minister Keir Starmer's resignation in stride, with the move widely anticipated following Labour's poor local election results. Sterling is also finding support from expectations that Andy Burnham could bring greater political stability and a more market-friendly approach if he succeeds Starmer.
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