The USD is trading lower, while oil prices, equities, and bond yields move higher. On the economic front, attention turns to today’s ISM Services and ADP employment data ahead of Friday’s non-farm payrolls. U.S. regulators are considering a review of bank liquidity rules, arguing current requirements hinder lending and may need reform. U.S. financial firms are on high alert for potential Iran-linked cyberattacks following escalating Middle East tensions. Blackstone’s flagship private credit fund saw $1.7B in net withdrawals in Q1 amid investor concerns over the private credit sector. Asian stocks tumbled as Middle East tensions fuel inflation fears, with the MSCI Asia-Pacific index down 4.2% and Korea’s KOSPI plunging over 11%.
News Headlines. U.S. and Israel step up strikes on Iran as Tehran retaliates and prepares to name a new supreme leader. Spain’s PM Sanchez condemned U.S.–Israel strikes on Iran and refused base access, prompting Trump to threaten a trade embargo and criticize UK PM Starmer as ‘no Churchill’ over Britain’s limited support. The EU plans to boost manufacturing competitiveness with ‘Made in Europe’ requirements for low-carbon industries and key technologies.
In currency markets. ECB policymaker Kazaks said the central bank should keep rates steady for now amid uncertainty from the Iran conflict and potential inflation risks. The SNB signaled greater readiness to intervene in FX markets after the Swiss franc strengthened amid Middle East tensions. BOJ Governor Ueda signaled further rate hikes if forecasts hold, while warning Middle East tensions could weigh on global growth and inflation. Asian currencies rebound from yesterday’s sell-off, led by KRW (+0.90%), with JPY (+0.33%), CNY (+0.24%) and THB (+0.36%) higher, while high yielders MXN (+0.56%) and ZAR (+1%) also gain.
In commodity markets. Oil prices rose around 1% on Wednesday on supply concerns following U.S.-Israeli strikes on Iran, though gains eased after President Trump indicated the U.S. Navy could escort ships through the Strait of Hormuz. Gold and silver rebounded, retracing about half of yesterday’s sharp losses. In agricultural commodities, soybeans are up 1.0%, while wheat and lumber are down 0.87% and 0.18%, respectively.
USD/CAD edges lower, while the recent rise in oil prices linked to Middle East tensions provides support to the Canadian dollar.
EUR/CAD rebound from yesterday’s low as higher oil prices support the Canadian dollar while markets watch ECB and BoC policy expectations.
EUR/USD rebounds from yesterday’s lows as markets look ahead to upcoming U.S. data.
GBP/EUR trades near 1.1500, with sterling steady as stronger-than-expected Eurozone inflation lends support to the euro.
GBP/USD advances toward 1.3400 as improved risk sentiment caps U.S. dollar gains
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