The USD holds steady, oil extends its rally, equity markets are mixed, and US yields rise as the Middle East conflict escalates. The U.S. dollar holds near 10-month highs as Middle East tensions sustained safe-haven demand, supporting the greenback. Elevated oil prices and favourable rate differentials continue to underpin strength, particularly against energy-importing economies. Focus now shifts to upcoming U.S. labour data, which will be key in determining whether the dollar extends gains or pulls back. Global equities are mixed, with U.S. futures and European markets edging higher, while Asian stocks declined sharply amid escalating tensions over the war in Iran and rising oil prices. The regional divergence reflects sensitivity to energy costs, with Asia underperforming due to its reliance on imports. Focus now turns to Fed Chair Powell, as markets assess how policymakers will navigate war-driven inflation risks and the prospect of higher-for-longer interest rates. Elsewhere, oil, gold, and bitcoin are strengthening as geopolitical tensions and the Iran conflict drive demand for inflation hedges and safe-haven assets. Elevated oil prices on supply concerns, alongside firmer gold and resilient bitcoin, reflect a market increasingly positioned for sustained uncertainty and higher inflation. Today's focus will be on Fed Chair Powell's speech, the German inflation report, and Iran/US war updates to provide intraday direction for currency markets.
In the news. Trump says the US could 'take the oil in Iran'. Brent oil rose to $116 as Trump stokes fears of protracted conflict. Distressed-debt funds target private credit downturn as 'greatest opportunity' since 2008. US-Israeli war against Iran escalates as talks prove fruitless. Israel reports second attack from Yemen as Middle East conflict escalates. Brent heads for record monthly leap as Houthi attacks widen Gulf conflict. Airlines face a fare dilemma as a fuel spike threatens travel demand. WTO suffers fresh blow as reform push hits a wall at Cameroon meeting. Japan steps up threats of intervention, signals rate-hike chance. Canada's NDP elects Avi Lewis as its leader.
In currency markets. The Norwegian krone and Mexican peso have weakened against the U.S. dollar as geopolitical tensions drive a broader risk-off move and boost demand for the greenback. Meanwhile, the Japanese yen remains near intervention levels around 160, with authorities signalling readiness to act against further depreciation. CNY is flat, while Asian currencies retreat by an average of 0.45% against the USD. Trading currencies come under pressure again, with NOK & MXN tumbling 0.9%, KWD & PLN weakening 0.7%, ZAR & CZK retreating 0.55%, NZD, SEK & DKK falling 0.4%, AUD & CHF down 0.15%, and outlier JPY firmed 0.35% against the USD.
In commodity markets. Oil & Silver prices rallied 2%. Natural Gas prices tumbled 3.25%. Gold prices strengthened 0.85%. Copper & Soybean prices gained 0.5%. Coffee prices weakened 2%, and Wheat prices eased 0.2%.
CAD extended its decline for a second week, pressured by persistent safe-haven demand for the U.S. dollar amid ongoing tensions in the Middle East. Despite higher oil prices, which would normally support the loonie, the broader risk-off environment and strong U.S. dollar momentum continue to dominate. Attention now turns to Fed Chair Powell and upcoming Canadian GDP data for clearer direction on near-term moves.
EURCAD is stalling near 1.6000 despite higher oil prices, as broader risk aversion and U.S. dollar strength are diluting support for the Canadian dollar. The euro side remains constrained, with today’s German inflation data in focus for clues on ECB policy and near term direction. Overall, the pair remains rangebound as competing macro forces keep price action anchored near current levels.
EUR retests 1.1500 after rebounding from weekly lows, but upside remains limited amid persistent geopolitical tensions that support the U.S. dollar. Focus now turns to German inflation data, which could influence ECB policy expectations and provide near-term direction for the pair. With markets also watching Fed Chair Powell, policy signals from both sides are likely to shape the next move.
GBPEUR holds above 1.1500 as geopolitical tensions and energy market risks continue to cap moves, keeping investors cautious. Focus remains on today’s German inflation data, which could shape ECB policy expectations and provide direction for the cross. With Middle East risks supporting oil prices and weighing on energy-importing economies like the UK, upside in the pound remains limited.
GBP has rebounded after recent losses but remains capped below 1.3300, as lingering geopolitical tensions and firm U.S. dollar demand limit upside. While a pause in dollar strength offers some support, expectations of higher U.S. rates driven by elevated oil prices continue to act as a headwind. Focus now shifts to Fed Chair Powell and Tuesday’s UK GDP data, which could determine whether the pair extends its recovery or resumes its downward bias.
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