- US and Iran peace talks fail
- Trump announces a US naval blockade of Strait of Hormuz
- The US dollar trades higher overnight but eases in NY
USDCAD open: 1.3844, overnight range 1.3841-1.3878, close 1.3841, WTI 104.46, Gold 4715.71
The Canadian dollar drifted lower during the Asian session before recouping the losses ahead of the New York open. The initial plunge followed the collapse of the US/Iran talks in Pakistan and was exacerbated by Trump’s tweet announcing a US naval blockade of the Strait of Hormuz.
US Vice President JD Vance attempted to dictate peace terms to Iran in the guise of a negotiation. He was firmly rebuffed. Trump reacted with his usual bombast and bluster, announcing a US naval blockade of the Strait of Hormuz starting this morning at 10:00 am ET.
“Effective immediately, the United States Navy, the Finest in the World, will begin the process of BLOCKADING any and all Ships trying to enter, or leave, the Strait of Hormuz.”
He added, “I have also instructed our Navy to seek and interdict every vessel in International Waters that has paid a toll to Iran. No one who pays an illegal toll will have safe passage on the high seas.”
The news was rather underwhelming to FX markets as Trump is called TACO Man for a reason. Traders were cautiously hopeful as although the talks ended, neither side fired missiles.
Oil traders reacted poorly. Trump’s latest threat suggest that oil will not be moving through the Strait of Hormuz at pre-war levels any time soon. Prices rose from Friday’s close of 96.87 to 105.62 before easing to 103.76 in New York trading..
Global markets are reacting accordingly. Asian equities ended the session lower, with Australia’s ASX 200 falling 0.39%, Japan’s Topix down 0.45%, and Hong Kong’s Hang Seng losing 0.90%.
By 715 am, European bourses were under pressure. Germany’s DAX is down 0.99%, France’s CAC 40 has dropped 0.83%, and the UK FTSE 100 has lost 0.39%. S&P 500 futures are down 0.50%, the 10-year Treasury yield is 4.342%, and the DXY index is 98.89.
EURUSD traded in a 1.1664-1.1700 range after opening gapping lower from Friday’s 1.1733 New York close on the back of the failed negotiations and escalating tensions around Hormuz. The pair found modest support following news that Viktor Orbán lost Hungary’s election to the more moderate Péter Magyar. EURUSD continues to hold above 1.1530.
GBPUSD opened lower in Asia before stabilizing, trading within a 1.3381-1.3434 band. The modest recovery reflects tentative optimism that the ceasefire could still hold, as neither side has resumed missile or drone strikes.
USDJPY surged from 159.25 at Friday’s close to 159.85 before easing to 159.70 in New York. The move was driven by higher oil prices and broad-based US dollar strength.
AUDUSD initially declined on risk aversion but later recovered, trading in a 0.6990-0.7059 range as markets steadied following the initial reaction to the breakdown in US-Iran talks.
There are no top-tier US or Canadian economic releases today. The 10:00 am deadline tied to the US blockade is the main focus
