- Risk aversion driving markets lower
- Traders are sceptical about Trump’s peace talks claims
- The US dollar is higher against the major currencies.
USDCAD open: 1.3827, overnight range 1.3805-1.3838, close 1.3813, WTI 93.61, Gold 4423.19
The Canadian dollar is tracking the broader US dollar tone and is under pressure because the greenback remains bid. Traders are firmly in risk-off mode, focused on Middle East tensions and the knock-on effects for crude, leaving the Canadian dollar to move largely in line with external drivers.
WTI traded in a 90.73-94.10 range overnight before easing to 93.35 in New York. Prices are staying elevated amid conflicting signals from Washington and Tehran on potential peace talks, congestion through the Strait of Hormuz, and continued missile activity across the region.
Bank of Canada Senior Deputy Governor Carolyn Rogers is scheduled to speak to the Brandon Chamber of Commerce on economic conditions, monetary policy, and affordability.
US weekly jobless claims are forecast to rise by 5,000 to 205,000, although the release is unlikely to move markets. There are no major Canadian economic reports on today’s calendar.
Global markets continue to be whipsawed by a stream of conflicting headlines tied to the Iraq conflict. The White House signals that negotiations are underway and that Trump has recently indicated a desire to avoid a drawn-out war.”
Iran acknowledged that “messages have been exchanged,” but quickly followed up with denials that peace talks are underway.
So, who is credible?
Markets price action suggests little faith in the White House narrative. Oil, the US dollar, and Treasury yields are all higher, while equity markets remain under pressure.
Asian equity indices are down. Japan's Topix fell 0.22%, Hong Kong's Hang Seng fell 1.89% and Australia's ASX is flat.
As of 7:25 am, the French CAC 40 has lost 0.81%, Germany’s DAX is down 1.28%, and the UK FTSE 100 has dropped 1.11%. S&P 500 futures are down 0.7o%, the US 10-year Treasury yield is at 4.385%, and the DXY is at 99.74.
EURUSD traded sideways in a 1.1548-1.1572 range, pressured by uncertainty surrounding the US-Iran situation and the knock-on effects of firmer oil prices. German Gfk consumer confidence deteriorated to -28 from -24.8, because of escalating Middle East tensions.
GBPUSD drifted in a 1.3333-1.3371 range, edging lower before recovering to 1.3357 in early New York trading. Sentiment was hit after the British Retail Council reported a sharp drop in consumer expectations to -53 in March from -30 previously.
USDJPY firmed in a 159.29-159.55 range, holding near the top of the band on the back of broad US dollar demand and higher Treasury yields.
AUDUSD traded defensively in a 0.6930-0.6957 range, remaining under pressure after softer-than-expected inflation data. The outcome has increased expectations that the RBA may pause its tightening cycle.
