The USD is steady, oil prices retreat, while equity markets and US yields are mixed amid Middle East uncertainty and US debt concerns. The USD holds near multi-month lows as concerns over the U.S. Treasury’s expanded long-dated bond buyback program and broader debt sustainability continue to weigh on the greenback. Attention turns to Wednesday’s key U.S. PCE inflation report, the Fed’s preferred inflation gauge, followed by Fed Chair Kevin Warsh’s Jackson Hole speech on Friday for further direction on U.S. rates and policy. Global equity markets are mixed, with technology shares dragging Asian markets and U.S. futures lower, while European equities edge higher. Nvidia’s upcoming earnings are adding to caution across the technology sector, while a pullback in oil prices is easing some of the recent pressure on global bond yields. Elsewhere, oil prices retreat as markets await details of U.S. plans to tighten sanctions on Iran and their potential impact on energy flows through the Strait of Hormuz, while gold and Bitcoin firm as continued concerns over U.S. debt and dollar debasement support alternative assets. In focus today: The economic calendar is exceptionally light, with no major high-impact releases from the U.S., Canada, the UK, or the Eurozone; the U.S. Chicago Fed National Activity Index is the main data release, leaving broader market sentiment to drive currency markets.
News Headlines. 'They asked too much': Canadian dollar slides as Ottawa and Washington head for an all-out trade war. Iran warns of Hormuz ship seizures ahead of Bessent's planned sanctions push. Mediator Pakistan to hold talks in Iran on US 'economic D-Day'. Oil falls ahead of US announcement of new sanctions on Iran. The UK briefs energy chiefs after Iran-linked cyber attack reports. Warsh seeks to soothe investors' nerves as signs of economic strain mount. Singapore offers parents $55k in battle to boost birth rates. Hit by Trump tariffs, Quebec loses appetite for quick separation from Canada. Iran threatens 46 ships in the Strait of Hormuz transit crackdown.
In currency markets. Against the USD, G10 currencies ease modestly in early trading as investors turn cautious ahead of a busy U.S. week. Wednesday’s core PCE inflation, revised Q2 GDP, and durable goods data will provide the next test for Fed expectations before Chair Kevin Warsh’s Jackson Hole speech on Friday; elevated Treasury yields and uncertainty over new U.S. sanctions on Iran are also keeping currency markets cautious.
In commodity markets. WTI -2.40% | Nat Gas -0.29% | Gold +0.43% | Silver -0.93% | Copper +0.08% | Palladium +0.06% | Coffee +0.45% | Cocoa -2.25% | Soybeans -0.18% | Wheat +1.82%
CAD weakens off multi-month highs in early trading as the collapse of US-Canada trade talks and new tariffs weigh on sentiment, compounded by a sharp retreat in oil prices. With no further trade talks currently scheduled and retaliatory Canadian tariffs due in September, uncertainty is likely to keep CAD under short-term pressure, although broader US dollar weakness may limit the extent of losses.
EURCAD strengthens through 1.6100 and tests 1.6150 as the Canadian dollar comes under renewed pressure following the collapse of Canada-U.S. trade negotiations and the introduction of 50% U.S. tariffs on roughly $20 billion of Canadian goods. Weakening oil prices are adding to pressure on the loonie, while the euro remains close to three-month highs; with trade uncertainty likely to remain a significant CAD headwind, the near-term bias favours further EURCAD strength.
EUR holds firm above 1.1650 and close to three-month highs, with concerns over U.S. debt and the Treasury’s expanded bond-buyback program continuing to provide underlying support. Near-term gains are tempered by caution ahead of details on new U.S. sanctions against Iran, while Wednesday’s U.S. PCE inflation report and Fed Chair Kevin Warsh’s Jackson Hole speech on Friday remain the key events this week.
GBPEUR edges higher in early trading, with GBP supported by Friday’s stronger UK services PMI, which reached a six-month high and reinforced signs of improving domestic momentum. Eurozone activity also surprised positively, but softer inflation pressures reduced the policy implications for the ECB, giving sterling a modest relative advantage and keeping the cross supported around 1.1650.
GBP holds firm near six-month highs around 1.3650, supported by persistent U.S. debt concerns and the Treasury’s expanded long-dated bond-buyback program, which continue to limit dollar recoveries. Better-than-expected UK business activity is providing additional support, although caution ahead of Wednesday’s U.S. PCE inflation report and Fed Chair Kevin Warsh’s Jackson Hole speech on Friday is containing further gains.
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