The USD is flat, oil prices edge higher, equity markets are up, and US yields rise as investors weigh US-Iran tensions. The U.S. dollar is steady in early trading, holding near one-week highs as renewed Middle East tensions continue to underpin safe-haven demand. Investors are also digesting the Federal Reserve meeting minutes, which reinforced the view that policymakers remain focused on inflation and have left the door open to further policy tightening if price pressures persist. Global equity markets are mostly higher in early trading as investor sentiment improves despite ongoing tensions in the Middle East, with markets taking comfort that the conflict has not broadened significantly. Technology shares are leading gains following strong demand for SK Hynix's U.S. listing, while attention now turns to next week's U.S. inflation data and Federal Reserve Chair Kevin Warsh's testimony for further direction. Elsewhere, oil prices continue to hold firm, following yesterday's sharp rally as markets assess the latest developments in the Middle East and the risk of further supply disruptions. Gold and Bitcoin are rebounding as bargain hunting emerges following recent declines. Today's economic calendar is quite light, so focus will be on US Initial Jobless claims and comments from BoE & Fed policymakers to help provide direction to currency markets.
News Headlines. The US carries out second day of strikes against Iran. Trump's surprise Ukraine shift steadies nervous NATO allies. AstraZeneca shares slide 9% after heart treatment disappoints in trial. EU's border check needs complete 'overhaul', says Greek airport chief. Eurostar orders trains to cope with 55C 'Saudi' summers. China's factory gate prices surge over Iran war turmoil. Russia bans diesel exports in fuel crunch. China's producer inflation jumps to 4-year high, squeezing manufacturers. First Chinese EV's arrive in Canada, but they come with a high price tag. Premier Ford responds to proposed US alcohol law: "We won't back down'.
In currency markets. Against the U.S. dollar, major currencies are broadly stable in early trading, with the New Zealand dollar the notable outperformer after the Reserve Bank of New Zealand raised interest rates and signalled that further policy tightening may be needed to contain inflation. The U.S. dollar remains supported by the Federal Reserve's cautious, inflation-focused stance, keeping most major currencies confined to narrow trading ranges.
In commodity markets. Oil +0.30% | Nat Gas -0.10% | Gold +0.80% | Silver +1.35% | Copper +0.25% | Palladium +2.10% | Coffee +2.00% | Cocoa +1.49% | Soybeans -0.40%
CAD is easing modestly against the U.S. dollar in early trading after strengthening sharply on Wednesday, as higher oil prices continue to provide support for the commodity-linked loonie. Markets are now pricing around a 60% probability of a Bank of Canada rate hike this year, up from roughly 40% earlier this week, reflecting concerns that stronger energy prices could keep inflation elevated. Investors will also look to today's U.S. jobless claims data for further direction ahead of next week's U.S. inflation report.
EURCAD is edging higher in early trading despite firmer commodity prices, as broad-based Canadian dollar gains remain limited. While stronger oil continues to support the loonie, the policy outlook still favours the euro, with markets expecting the European Central Bank to remain tighter than the Bank of Canada over the medium term.
EUR is sidelined against the U.S. dollar in early trading as investors weigh lingering Middle East tensions against reduced expectations for aggressive Federal Reserve tightening following last week's softer U.S. jobs data. Attention now turns to today's ECB meeting accounts and U.S. weekly jobless claims for fresh clues on the policy outlook on both sides of the Atlantic.
GBPEUR is holding steady near its 52-week high of 1.1739 as sterling continues to benefit from relatively attractive UK yields and expectations that the Bank of England will keep policy restrictive for longer than previously anticipated. The euro remains on the defensive as investors await clearer signals on the ECB's next policy move, while easing UK fiscal concerns continue to underpin the pound.
GBP is holding steady just above 1.3400 against the U.S. dollar in early trading, hovering near multi-week highs as easing UK political uncertainty and expectations that the Bank of England will keep policy restrictive continue to support sterling. Investors will now focus on today's U.S. weekly jobless claims, comments from New York Fed President John Williams, and next week's U.S. inflation data for further direction on the Federal Reserve's policy outlook.
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