- Global risk sentiment sours following Trump’s speech
- Oil prices surge on fears of Iran war escalation
- The US dollar is in demand and posting gains across the board.
USDCAD open: 1.3917, overnight range 1.3869-1.3928, close 1.3876, WTI 107.66, Gold 4620.01.
The Canadian dollar reversed the previous session’s rally, and is under stress heading into the long weekend as risk appetite deteriorated. Sentiment turned after Trump vowed to intensify military action against Iran over the next two to three weeks and sent crude prices soaring.
WTI traded in a 98.90-107.82 range, surging on the escalation and compounded by Iran’s response involving missile and drone strikes across Israel, Iraq, and the UAE. The news does not suggest that the Strait of Hormuz will reopen soon.
Canada’s trade deficit expected to narrow to $2.3 billion from $3.65 billion, while the US deficit is seen widening to $59.2 billion from $54.5 billion.
US weekly jobless claims are forecast to edge up by 2,000 to 212,000. Friday’s US nonfarm payrolls report for March, is expected to show a 60,000 gain following February’s 92,000 loss. Neither report should cause much of a reaction as Trump’s remarks have likely sidelined economics in favour of geopolitics.
Global markets are running in holiday mode today, with much of Scandinavia, along with Portugal, Spain, and Mexico, observing Holy Thursday/Maundy Thursday and effectively kicking off the long Easter weekend early. Tomorrow, markets across Canada, Europe, and the UK are shut for Good Friday, while in the US both the NYSE and Nasdaq are closed. Japan and China remain open.
Asian equity markets ended in the red, led by Japan’s Topix falling 1.61%, Hong Kong’s Hang Seng down 0.70%, and Australia’s ASX off 1.06%.
European bourses are also under pressure, with Germany’s DAX down 2.12% and France’s CAC 40 lower by 1.11%, while the UK FTSE 100 is down 0.21%. US futures are weaker, with S&P 500 futures down 1.34%. The US 10-year Treasury yield is at 4.368%, and the dollar index sits at 100.26.
EURUSD traded in a 1.1513-1.1606 range and remains under pressure in early New York as concerns mount that an escalation in the Iran conflict could keep the Strait of Hormuz disrupted for longer. Bank of Italy Governor Fabio Panetta warned that shifting risk sentiment could add stress to sovereign bond markets, while an ECB official noted it is too soon to judge whether policy action will be required at the April meeting.
GBPUSD plunged in a 1.3188-1.3320 range and is hovering near session lows in New York after a broad risk-off move hit the currency. The decline gathered pace after Bank of England Governor Andrew Bailey pushed back on expectations for near-term rate hikes, suggesting markets were getting ahead of themselves in pricing tighter policy.
USDJPY traded in a 158.55-159.73 range and climbed alongside higher US Treasury yields and surging oil prices, with rate differentials continuing to underpin demand for the pair.
AUDUSD traded in a 0.6864-0.6940 range and retreated as the deteriorating risk backdrop outweighed a sharp improvement in Australia’s trade surplus, which jumped from 2.25 billion to 5.68 billion.
