The USD firms, oil prices rally, equity markets are mixed, and US yields rise amid rising Middle East tensions. The U.S. dollar firmed in early trading as fresh Iranian attacks and ongoing uncertainty surrounding Middle East peace negotiations boosted demand for safe-haven assets. Investor focus is also turning to today's U.S. ISM Services PMI and labour market indicators, with stronger economic data likely to reinforce expectations that the Federal Reserve will keep interest rates higher for longer. Global equity markets were mixed, with Asian stocks advancing on continued strength in technology shares, while U.S. futures and European markets eased as investors adopted a more cautious stance amid renewed tensions between the U.S. and Iran. Market focus is increasingly shifting toward upcoming U.S. economic data, including the ADP employment report and ISM Services PMI, as traders assess whether the economy remains strong enough to support expectations for higher-for-longer Federal Reserve interest rates. Elsewhere, oil prices rallied amid renewed tensions in the Middle East and concerns over potential supply disruptions, while gold and bitcoin prices edged lower as investors focused on upcoming U.S. economic data and the outlook for interest rates. In focus today: the US ADP Employment Change, ISM Services PMIs and the Fed's Beige Book to drive intraday market direction.
News Headlines. US and Iran exchange renewed fire as tensions rise over stalled peace talks. The US proposes tariffs of at least 10% after forced labour probe. Warsh set to revamp Fed's signals to Wall Street. Trump drops $1.8bn 'anti-weaponization' fund. Chinese investors fear missing out on SpaceX IPO after crackdown. Iran peace deal would not derail case for ECB rate rise, says central banker. The OECD warns of 'dark scenario' if Gulf energy crisis drags on. Brussels unveils sweeping plan to boost Europe's digital sovereignty. Carney shrugs off Trump's latest 51st state jab as trade talks ramp up. Drone strike hits Russian oil terminal near St Petersburg.
In currency markets. Against the USD, major currencies eased as rising tensions in the Middle East boosted demand for the safe-haven greenback, while investors adopted a cautious stance ahead of today's key U.S. economic releases. Market focus is centred on the ISM Services PMI and labour market data, with stronger-than-expected results likely to reinforce expectations that the Federal Reserve will keep interest rates higher for longer.
In commodity markets. Oil prices rally 2.9%. Natural Gas prices strengthened 2.2%. Gold & Copper prices weakened 1%. Silver prices tumbled 1.5%. Coffee prices are flat. Soybean prices firmed 0.3%, and Wheat prices eased 0.5%.
CAD holds near multi-week lows in early trading as investors continued to assess the implications of Friday's recession-confirming GDP report and the widening growth divergence between Canada and the United States. While higher oil prices offered some support to the commodity-linked currency, expectations that the Bank of Canada will remain on hold next week, alongside uncertainty surrounding upcoming Canada-U.S. trade negotiations ahead of the July CUSMA review, continued to weigh on the loonie.
EURCAD holds steady around the 1.6100 level in early trading as expectations for further ECB rate hikes continued to support the euro. Meanwhile, the Canadian dollar remained constrained by weak domestic growth prospects following Friday's GDP report confirming a recession. Investors are now looking ahead to Friday's Canadian employment data for further clues on the Bank of Canada's policy outlook.
EUR held steady in early trading as investors balanced expectations for further ECB policy tightening against ongoing U.S. dollar support from heightened geopolitical tensions and resilient U.S. economic data. Market attention now turns to today's ADP employment report and services PMI data, while Friday's non-farm payrolls report remains the key near-term catalyst for both the euro and broader currency markets.
GBPEUR held steady in early trading as revised PMI data pointed to weaker economic activity in both the UK and the Eurozone, while expectations for further monetary tightening from the Bank of England and the European Central Bank remained intact. With markets pricing additional rate hikes from both central banks, the pair remained range-bound as investors awaited fresh policy signals and economic data.
GBP is largely sidelined despite renewed hawkish rhetoric from Bank of England policymakers. Instead, price action was driven by a firmer U.S. dollar as escalating tensions between the U.S. and Iran boosted safe-haven demand and reinforced expectations that elevated energy prices could keep inflation pressures persistent. Investors are now focused on today's ADP employment report and ISM Services PMI, with stronger U.S. data likely to further support the view that the Federal Reserve will keep interest rates higher for longer.
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