The USD steadies, oil prices retreat, equity markets are up, and US yields rise as focus shifts to central banks. Currencies traded in a relatively narrow range as a cooling in oil prices helped calm markets, with the U.S. dollar edging slightly higher. The greenback remained supported after recent safe-haven demand, holding near multi-month highs as investors await guidance from central banks. Investor focus now turns to upcoming policy decisions from the Fed, ECB, BoE and BOJ, with markets looking for clues on inflation and the outlook amid the ongoing Middle East conflict. Global equities advanced as oil prices eased, offering markets some relief ahead of the Federal Reserve decision, with gains across U.S. futures, European stocks and Asian markets. Attention now turns to the Fed, where rates are expected to remain unchanged, as investors look for guidance on the impact of geopolitical tensions and energy-driven inflation on growth and policy. Elsewhere, oil prices fell after Iraq resumed exports via Turkey’s Ceyhan port, easing supply concerns, while gold and Bitcoin prices also slipped as investors adopted a more cautious tone ahead of the Federal Reserve decision. In focus today are the Fed & BoC interest rate decisions and their respective monetary policy statements, which will help drive intraday direction in currency markets.
In the news. Iran is still seen as capable of escalating attacks on the Ukraine pivots on the Russian oil pipeline after EU pressure. Drone-struck Russian LNG tanker threatens 'ecological disaster' in the Mediterranean. Iran conflict turns shipping market into 'wild west'. UAE set to show leniency on tax rules for expats leaving to avoid the Iran war. Oil price surge will hurt US growth and fuel inflation, say economists. Canada knew 'from the beginning' CAF wouldn't help attack Iran. French foreign minister suggests Canada could 'maybe ... at some point' join the EU. Iran strikes Tel Aviv with cluster warheads in retaliation for the killing of the security chief.
In currency markets. Against the U.S. dollar, the Indian rupee remained under significant pressure, hitting record lows near 93 as persistent foreign capital outflows and elevated oil prices weighed on the import-dependent economy. Higher crude costs are a key concern for India, as they widen the trade deficit and add to inflation risks, limiting the central bank’s flexibility. Meanwhile, the South African rand strengthened in early trading, supported by improved risk sentiment, though it remains sensitive to shifts in global market conditions. CNY extends gains, up 0.2%, while Asian currencies fall 0.2% on average against the USD. Trading currencies are mixed, with SEK falling 0.3% and NOK, CHF, and JPY easing 0.1%, KWD, AUD, PLN, CZK & DKK flat, NZD, up 0.1%, MXN gaining 0.2%, and ZAR strengthening 0.4% against the USD.
In commodity markets. Oil prices weakened 1.7%. Natural Gas prices tumbled 2.2%. Gold & Soybean prices eased 0.3%. Silver prices flat. Copper & Coffee prices retreated 0.6%. Wheat prices firmed 0.2%.
CAD continues to straddle the 1.3700 level against the U.S. dollar, softening slightly as markets adopt a cautious stance ahead of today’s Federal Reserve and Bank of Canada policy decisions. The Bank of Canada is widely expected to keep rates on hold at 2.25%, maintaining a wait-and-see approach as it assesses the impact of rising oil prices and global uncertainty on the inflation outlook. While higher crude prices could add to inflation pressures, recent softer economic data and easing inflation have tempered expectations for further tightening, leaving the near-term direction of the CAD dependent on central bank guidance.
EURCAD traded flat as markets remained cautious, with the cross stabilizing despite ongoing volatility in oil prices and broader geopolitical uncertainty. The euro has fallen nearly 2% since the start of the Iran conflict amid rising energy costs favouring the loonie. Focus now remains on this week’s Bank of Canada decision and the European Central Bank meeting, with both central banks expected to hold rates steady while assessing the inflation impact of the ongoing war and elevated energy prices.
EUR continued to trade in a narrow range below 1.1550 as investors remained cautious ahead of today’s Federal Reserve decision, limiting directional moves. The Fed is widely expected to keep rates unchanged, with markets focusing on the policy statement, dot plot and Chair Powell’s comments for guidance on inflation and growth amid the ongoing Middle East conflict. Attention will then shift to Thursday’s European Central Bank meeting, where policymakers are also expected to hold rates steady while maintaining a cautious tone.
GBPEUR edged higher as the euro softened, with the cross trading near recent levels while markets adopt a wait-and-see approach. Traders are expected to remain sidelined ahead of Thursday’s European Central Bank and Bank of England interest rate decisions, with both central banks widely anticipated to keep policy unchanged.
GBP traded flat in early trading and continues to straddle the 1.3350 level as the U.S. dollar struggles for direction ahead of the Federal Reserve decision. Investors remain cautious, with markets expecting the Fed to keep rates unchanged while focusing on guidance around inflation and growth. Attention will then shift to the Bank of England meeting on Thursday for further direction on the pound.
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