The USD holds steady, oil prices are higher, equity markets are mixed, and the US rises amid worsening US-Iran hostilities in the Middle East. The U.S. dollar holds steady in early trading after softer-than-expected U.S. inflation reduced expectations of a near-term Federal Reserve rate hike. During his congressional testimony, Fed Chair Kevin Warsh reiterated that the Fed has "no tolerance" for persistently elevated inflation and pledged to act if price pressures remain entrenched, while ongoing U.S.-Iran tensions and elevated oil prices continue to keep inflation risks in focus and provide underlying support for the greenback. Global equity markets are mixed, with Asian markets and U.S. futures higher while European markets are little changed. Technology stocks are leading gains after strong guidance from ASML reinforced confidence in AI-driven semiconductor demand. Elsewhere, oil prices are extending their gains as renewed U.S.-Iran hostilities and ongoing disruption risks in the Strait of Hormuz continue to underpin energy markets. Gold is edging lower on profit-taking, while Bitcoin remains firm as investors assess the softer U.S. inflation outlook and reduced expectations for near-term Federal Reserve rate hikes. In focus today: Markets will be watching the Bank of Canada interest rate decision, monetary policy report and press conference, alongside U.S. PPI inflation, Empire State Manufacturing, Fed Chair Kevin Warsh's testimony, and the Fed Beige Book to provide intraday direction to currency markets.
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In currency markets. Against the USD, currencies eased as investors remained cautious ahead of the second day of Federal Reserve Chair Kevin Warsh's testimony, while escalating U.S.-Iran tensions continued to support safe-haven demand for the greenback.
In commodity markets. Oil +1.00% | Nat Gas +0.70% | Gold -0.70% | Silver -0.90% | Copper -0.10% | Palladium -0.60% | Coffee -0.20% | Cocoa -4.24% | Soybeans +0.55% | Wheat +3.40%
CAD eases off monthly highs in early trading as investors await today's Bank of Canada interest rate decision, with policymakers widely expected to leave rates unchanged at 2.25%. While resilient domestic data and firm oil prices continue to support the loonie, markets will also closely watch Fed Chair Kevin Warsh's congressional testimony for further clues on the U.S. policy outlook, with the possibility of increasingly divergent policy paths emerging between the Bank of Canada and the Federal Reserve.
EURCAD holds steady in early trading as stronger oil prices continue to provide support for the Canadian dollar, offsetting broader resilience in the euro. Attention is now focused on today's Bank of Canada interest-rate decision, where policymakers are widely expected to leave rates unchanged while maintaining a cautious, wait-and-see stance, with the accompanying guidance likely to provide the next direction for EUR/CAD.
EUR is holding steady in early trading above 1.1400, with softer U.S. inflation continuing to temper expectations for further Federal Reserve tightening. However, weaker-than-expected Eurozone industrial production, elevated oil prices and Fed Chair Kevin Warsh's hawkish commitment to price stability are limiting euro gains ahead of today's U.S. Producer Price Index (PPI) data.
GBPEUR is flat in early trading, holding close to one-year highs as markets continue to price in further rate increases from both the Bank of England and the ECB following the recent surge in oil prices. Investors will also monitor comments from ECB policymakers today, although expectations that the BoE will maintain the more restrictive policy stance continue to provide underlying support for sterling against the euro.
GBP is holding steady around the 1.3400 level in early trading, supported by softer U.S. inflation and expectations that the Bank of England will maintain a relatively hawkish policy stance. Attention now turns to comments from BoE Chief Economist Huw Pill later today, while U.S. producer price data and the second day of Federal Reserve Chair Kevin Warsh's congressional testimony are expected to provide fresh direction for sterling.
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