The Morning Update

The USD steadies, oil prices rally, while equity markets and US yields are mixed amid increased Iranian strikes. The U.S. dollar steadied as investors remained sidelined ahead of key central bank meetings, with markets awaiting clearer signals on the policy outlook. Attention is focused on how the Federal Reserve and other major central banks will respond to rising oil prices and inflation risks stemming from the ongoing Middle East conflict. Global equities showed mixed performance: U.S. stock futures fell as higher oil prices weighed on sentiment, while European markets edged higher and Asian markets delivered mixed results. Rising crude prices and ongoing Middle East tensions continue to fuel inflation concerns, while investors remain cautious ahead of this week's key interest rate decisions from the ECB, the Federal Reserve, the Bank of Japan, and the Bank of Canada. Elsewhere, oil prices continued to rally above $100 a barrel as Middle East tensions fueled supply concerns and inflation risks. Meanwhile, gold prices were steady, and Bitcoin held around $74,000 as investors balanced risk sentiment across asset classes. Today sees a light economic calendar, so we expect investors to remain sidelined ahead of the Fed & BoC's interest rate decisions on Wednesday.

‍

In the news. President Trump says he will have the 'honour' of 'taking Cuba in some form'. Naval escorts will not guarantee safe passage through the Strait of Hormuz, says IMO chief. Spain warns the EU against suspending the carbon market to try to lower energy prices. Baltic high-speed rail link delayed as defence takes priority. Israel says it has killed intelligence chief Ali Larijani. Dubai flights were delayed or cancelled after the latest drone and missile attacks. NVIDIA's Huang predicts $1tn in AI chip revenue over 2 years. Canada is leaving the door open to assist in the Middle East, but has no plans to engage offensively. Amazon rolls out 1 & 3 hour delivery as the ultrafast shipping trend grows in the US.

‍

In currency markets. Against the U.S. dollar, the Japanese yen remained under pressure near 159, close to the key 160 level that has previously triggered intervention, with authorities reiterating readiness to act. The currency continues to face headwinds from higher oil prices and uncertainty around the Bank of Japan’s policy outlook. Meanwhile, the Australian dollar held steady after the Reserve Bank of Australia delivered a rate hike in a split decision, with expectations of further tightening providing underlying support. CNY is up 0.1%, while Asian markets are flat on average against the USD. Trading currencies improved, with ZAR down 0.15%, JPY, PLN & KWD flat, NZD, CHF, MXN & DKK up 0.15%. AUD & SEK advanced 0.3%, and NOK rallied 0.5% against the USD.

‍

In commodity markets. Oil prices rallied 2.5%. Natural Gas & Wheat prices slipped 0.2%. Gold & Silver prices firmed 0.3%. Copper prices tumbled 1.2%. Coffee prices flat, while Soybean prices eased 0.4%.

‍

CAD held steady near the 1.3700 level against the U.S. dollar, consolidating despite support from higher oil prices. Recent data showed Canadian housing starts edged higher in February, while inflation eased to 1.8% annually, just ahead of an expected pickup from rising energy costs. Focus now turns to the upcoming Federal Reserve and Bank of Canada policy decisions, with markets watching for guidance on how policymakers will respond to inflation risks and economic uncertainty.

‍

EURCAD firmed in early trading as the euro gained modest ground against the Canadian dollar, despite the backdrop of rising oil prices. The pair remains driven by broader macro factors, with investors focusing on this week’s key central bank decisions from the European Central Bank and the Bank of Canada for further direction.

‍

EUR finds support at .1500, stabilizing after recent losses as markets adopt a cautious tone ahead of the Federal Reserve policy decision. While safe-haven demand linked to ongoing Middle East tensions continues to underpin the U.S. dollar, the euro has managed to hold key support as investors await clearer guidance from both the Fed and the European Central Bank. The near-term outlook remains sensitive to shifts in risk sentiment and energy prices, which could influence inflation expectations and central bank policy paths.

‍

GBPEUR was little changed in early trading, holding steady as traders remained on the sidelines ahead of this week’s Bank of England and European Central Bank rate decisions. Markets are also watching upcoming UK employment data, which could provide further direction for the pair.

‍

GBP gained in early trading and held above the 1.3300 level as the U.S. dollar eased. The pair remains sensitive to shifts in risk sentiment amid ongoing geopolitical tensions, which continue to support safe-haven demand for the dollar. Focus now turns to this week’s Federal Reserve and Bank of England policy decisions for further direction.