The Morning Update

The USD edged higher, oil prices rose, equity markets slipped, and US yields edged higher. The greenback rebounded as escalating tensions between the US and Iran boosted demand for the safe-haven currency after diplomatic efforts to end the 10-week conflict showed little progress. Precious metals retreated with gold and silver giving back part of last week’s gains as renewed US-Iran tensions and persistent inflation concerns weighed on market sentiment. Bitcoin traded lower as traders balanced continued institutional demand against caution ahead of upcoming US economic data and evolving geopolitical risks. Stronger-than-expected US economic data released last Friday reinforced expectations that the Federal Reserve may keep interest rates elevated for longer, with investors now awaiting tomorrow’s CPI report for further clues on the inflation outlook.

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News Headlines: President Trump called Iran’s latest peace proposal “totally unacceptable,” raising concerns that prolonged Middle East tensions could continue disrupting shipping through the Strait of Hormuz and tighten global energy supplies. President Trump and Chinese President Xi Jinping are set to hold high-stakes talks in Beijing this week focused on Iran, Taiwan, artificial intelligence and critical minerals as both sides seek to stabilize strained US-China relations. Ukraine and Russia accused each other of violating a US-brokered ceasefire after renewed drone strikes and battlefield clashes raised doubts over efforts to secure a broader peace agreement. Russian President Vladimir Putin said he believes the Ukraine war is “coming to an end,” signaling openness to future European security negotiations despite ongoing tensions with the West. UK Prime Minister Keir Starmer announced plans to bring British Steel into public ownership after efforts to secure a commercial sale of the Scunthorpe steelworks failed.

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In currency markets. Global currency markets were shaped by a stronger US dollar following upbeat US economic data, while the euro remained supported by expectations of further ECB tightening, the pound faced pressure from weak UK labour market data and political uncertainty, and the Canadian dollar weakened after disappointing domestic employment figures. Investors are awaiting tomorrow’s Eurozone economic data releases for further clues on inflation and growth trends that could shape expectations for future ECB policy decisions.

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In commodity markets. Oil prices rallied 2.11%. Natural gas gained 1.36%. Gold dropped 1.06%. Silver slipped 0.02%. Copper gained 1.33%. Coffee edged lower 0.55%. Soybean rallied 1.20%, and Wheat gained 0.80%.

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USD/CAD moved higher as weak Canadian labor market data reinforced expectations that the Bank of Canada will prioritize supporting growth, while stronger-than-expected US economic data strengthened bets that the Federal Reserve could keep interest rates elevated for longer, boosting demand for the US dollar amid ongoing Middle East tensions.

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EUR/CAD moved lower as the Canadian dollar found support from resilient commodity prices and improving risk sentiment, while investors reassessed expectations for additional ECB tightening amid mixed Eurozone economic signals.

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EUR remained supported near multi-week highs as escalating US-Iran tensions boosted energy prices and reinforced inflation concerns, while expectations for further ECB rate hikes strengthened after policymakers signaled readiness to act if price pressures persist across the euro area.

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GBP/EUR edged lower as the euro drew support from expectations of further ECB tightening, while sterling remained pressured by cautious UK economic growth expectations.

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GBP held near multi-month highs as escalating US-Iran tensions supported safe-haven demand for the dollar, while investors monitored political pressure on Prime Minister Keir Starmer and continued weakness in the UK labour market.

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