The USD retreats, oil prices firm, while equity markets and US yields are mixed ahead of today's Fed minutes. The USD softens as Treasury yields ease from recent highs, with softer U.S. employment and inflation data continuing to weigh on expectations for further Fed tightening. Attention turns to today’s FOMC minutes for further policy guidance, while the ongoing U.S.-Iran impasse and elevated oil prices continue to pose upside inflation risks and provide some underlying support for the dollar. Global equity markets are mixed as markets stabilize following several days of pressure, with European equities recovering while U.S. futures are little changed and Asian technology shares remain under pressure. Easing bond yields are providing some relief, although concerns over elevated borrowing costs, AI-related spending and persistent U.S.-Iran tensions continue to temper risk appetite. Elsewhere, oil prices firm as the U.S.-Iran stalemate and uncertainty over Strait of Hormuz exports maintain a supply-risk premium, while gold and Bitcoin slip as elevated bond yields and cautious risk sentiment weigh on prices. In focus today: Markets will be watching the FOMC minutes from the Federal Reserve’s July meeting for further guidance on the U.S. interest-rate outlook, with EIA crude oil inventories also on the calendar. The Fed minutes are expected to provide the main direction for currency markets today.
News Headlines. Iran reportedly weighs attacks on US targets in Europe as UAE severs trade with Tehran. Amazon to expand drone service to nearly 500 cities after targeting 1 million deliveries this year. Treasury yields pull back from multi-decade highs ahead of the FOMC minutes. The world's largest olive oil company pops 15% as rivals circle in takeover battle. Trump pauses 50% tariffs on goods from Canada, says two sides have a deal. Chinese humanoid robot maker surges 600% in trading debut. Portuguese men o' war plague Europe's warming beaches. UK inflation accelerates to 2.9% in July amid Middle East energy shock.
In currency markets. Against the USD, G10 currencies are generally firmer as easing Treasury yields weigh on the greenback. The NZD remains the notable laggard, with the Kiwi still suffering from a comparatively softer domestic policy backdrop and persistent weakness versus the Australian dollar; the RBNZ has previously highlighted NZD depreciation and the relative strength of Australia as important drivers.
In commodity markets. WTI +1.00% | Nat Gas +0.43% | Gold -0.10% | Silver -1.21% | Copper -1.09% | Palladium -0.12% | Coffee -0.77% | Cocoa -0.42% | Soybeans +0.82% | Wheat +0.22%
CAD rebounds amid a softer U.S. dollar, with firmer oil prices providing additional support for the loonie. Canada-U.S. trade concerns have eased somewhat after President Trump paused the planned 50% tariffs for three days amid progress toward a deal, while domestic data showed Canadian home sales rising for a fourth consecutive month in July, reinforcing signs that the housing market is stabilizing despite a 5% decline in housing starts.
EURCAD is flat in early trading around 1.6050, with competing fundamentals keeping the cross contained. Higher Eurozone inflation and a relatively hawkish ECB outlook are supporting the euro, while firmer oil prices and the three-day pause in threatened U.S. tariffs on Canadian goods are supporting the loonie.
EUR strengthens through 1.1600 after Eurozone inflation accelerated to 2.9% in July, with core inflation also edging higher to 2.5%, reinforcing the ECB’s hawkish bias. ECB Chief Economist Philip Lane has warned that elevated energy prices could keep inflation near 3% through 2026, while attention now turns to today’s Fed minutes for further direction.
GBPEUR slips in early trading, falling toward 1.1680 as stronger Eurozone inflation reinforces expectations for further ECB tightening. UK inflation also accelerated to 2.9%, but softer services inflation and yesterday’s weaker labour data have limited the case for additional BoE tightening, leaving sterling slightly softer against the euro.
GBP holds firm above 1.3550 after UK inflation accelerated to 2.9% in July, broadly in line with expectations but slightly above the BoE’s forecast. Resilient UK growth and expectations for at least one further BoE rate hike provide support, although yesterday’s softer labour data and uncertainty over the longer-term policy outlook temper sterling gains.
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