- WTI oil prices soar
- Global equity markets plunge
- US dollar opens with gains across the board.
USDCAD open: 1.3700, overnight range 1.3661-1.3722, close 1.3675, WTI 76.34, Gold 5249.86
T the Canadian dollar is technically the strongest currency overnight, but that is hardly cause for celebration. The loonie is still lower by 0.21% against the US dollar. It could have been worse, but Canada’s identity as a major oil exporter has cushioned some of the damage. The escalating US-Iran conflict has rattled global markets, largely because of the threat to energy supplies and partly due to the absence of a clearly articulated US strategy.
WTI crude has jumped 8.17% since yesterday, climbing from 70.56 to 77.02 in New York trade. LNG prices have been even more explosive, adding another 30% after a 40% surge the previous day, following Qatar’s decision to shut its export terminal. The Republican Guard claims the Strait of Hormuz is closed, while US officials insist shipping remains open, leaving markets to navigate conflicting signals.
BoC Deputy Governor Sharon Kozicki cautioned that the Bank of Canada would not hesitate to tighten policy, even in a soft economy, if inflation pressures prove persistent.
Asian equity markets were hammered overnight. Japan’s Topix tumbled 3.24%, with the slide amplified by surging crude prices. Hong Kong’s Hang Seng lost 1.12%, while Australia’s ASX declined 1.34%.
By 7:20 a.m. NY time, Europe was firmly in risk-off mode. Germany’s DAX was lower by 3.55%, France’s CAC 40 had shed 2.89%, and the UK’s FTSE 100 was down 2.64%. The US dollar index surged from 97.87 to 99.20. The 10-year Treasury yield stands at 4.096%, and gold (XAUUSD) is trading at 5,196.08.
EURUSD traded in a 1.1586–1.1707 range and remains near session lows in early New York dealing. The euro is under pressure for two primary reasons. First, rising US Treasury yields have widened rate differentials in favour of the dollar. Second, escalating oil prices are fuelling concerns about renewed inflation pressures. Those worries intensified after February Core HICP printed at 2.4% y/y, exceeding the 2.2% forecast.
GBPUSD sank in a 1.3263–1.3426 range and is pinned near the bottom of that band. Sterling has been caught in the broader risk-off move as equity markets buckle under higher oil prices and inflation fears.
USDJPY rose in a 157.15–157.97 range, supported by broad US dollar strength, rising oil prices, and firmer Treasury yields. However, traders remain wary of pushing the pair beyond 158.00 amid the risk of potential BoJ intervention. Japan’s unemployment rate ticked up to 2.7% y/y from 2.6% previously.
AUDUSD dropped in a 0.7008–0.7128 range and is sitting near the lower boundary in New York trade. The Australian dollar is being weighed down by widespread risk aversion, dollar strength, and sliding equity markets. January building permits fell 7.2%, sharply below the expected 5.5% gain. Markets largely brushed aside comments from RBA Governor Michele Bullock, who warned that rates could rise in March should inflation expectations accelerate.
There are not any notable US or Canadian economic data on tap.
