- Risk sentiment improves on report Iran offers a peace strategy
- Canada releases Spring Fiscal Update tomorrow
- The US is trading with losses across the board
USDCAD open: 1.3609, overnight range 1.3606-1.3681, close 1.3670, WTI 96.46, Gold 4,703.71
The Canadian dollar edged higher as improving global risk sentiment, sparked by the Axios report on Iran's ceasefire proposal, gave the pair a modest lift.
The Bank of Canada meets Wednesday and it will be a snooze. Inflation is creeping higher but remains within the BoC's target band, leaving policymakers little reason to do anything other than hold.
WTI crude peaked in Asia before pulling back, with the session range sitting between 95.00 and 97.10. Oil remains well supported given the absence of meaningful progress on the Strait of Hormuz, compounded by Trump pulling the plug on travel plans for the US negotiating team.
Trump dismissed the Islamabad talks outright, arguing there is no point negotiating when nobody on the other side knows who is actually calling the shots.
That said, Axios reported that Iran has put a new proposal on the table, a fresh ceasefire as the opening move, with nuclear talks kicked down the road until the Strait of Hormuz situation is resolved. Markets took it as a win.
Central banks are front and centre this week. The BoJ goes first tomorrow, then the Bank of Canada and the Fed on Wednesday, with the ECB and Bank of England rounding things out.
Most Asian markets closed in the red, with Japan's Topix the lone bright spot, adding 0.50%. Australia's ASX 200 slipped 0.23% and Hong Kong's Hang Seng gave back 0.20%.
European bourses are holding gains as of 7:15 am, with the DAX up 0.77%, the CAC 40 adding 0.59%, and the FTSE 100 up 0.20%. S&P 500 futures are flat. The 10-year Treasury yield sits at 4.314%, and DXY at 98.32.
EURUSD, ranging between 1.1697 and 1.1751, sold off in Asia before recovering after the Axios Iran report made the rounds. Traders are treading carefully ahead of the Fed on Wednesday and the ECB on Thursday. German consumer confidence deteriorated further, with the GfK index dropping to -33.3 from -28.1, adding another layer of caution to euro positioning.
GBPUSD, ranging between 1.3505 and 1.3558, tracked EURUSD through the session, softer in Asia before firming up into the New York open. King Charles is in Washington meeting Trump, with UK officials quietly hoping the royal charm offensive can patch up relations strained by Britain's refusal to back Trump's Iran campaign. The Warsh nomination news gave sterling an additional nudge higher, though Starmer's increasingly wobbly political standing remains a nagging headwind.
USDJPY, ranging between 159.10 and 159.60, churned in a tight band, bouncing then fading, with elevated oil prices keeping a floor under the pair. The BoJ is all but certain to hold at 0.75% tomorrow while signaling it is not done tightening, a classic hawkish hold as policymakers thread the needle between slowing growth and oil-driven inflation.
AUDUSD, ranging between 0.7131 and 0.7191, caught a bid on firmer risk appetite, stronger commodity prices, and growing conviction that the RBA will deliver another rate hike in May.
