- US and Iran renew attacks. Oil prices spike
- US inflation data on tap.
- US is clawing back some overnight losses.
USDCAD open: 1.4086, overnight range 1.4084-1.4158, close 1.4159, WTI 80.59, Gold 4,020.99
The Canadian dollar traded slightly higher overnight on the back of surging oil prices after Trump launched a fresh round of attacks on Iran. Even so, Traders were more concerned about today’s US inflation data after hawkish comments from Fed Governor Chrisopher Waller.
He said “If we get another hot reading on core inflation this week, then the FOMC will need to consider tightening monetary policy in the near term.” US CPI forecast -0.1% m/m and 3.8% y/y. Core CPI is expected at 0.2% m/m and 2.8% y/y.
There are no Canadian economic reports on tap.
Renewed turmoil sent oil prices surging higher. Trump ordered fresh strikes against Iran and said he would renew the naval blockade of the country. WTI rose 3.4% overnight, trading in a 77.91-81.27 range and is at 80.99 in NY.
President Trump described the conflict as "going well," insisting once again that Iran possesses "no air force, no navy, no military." Tehran's Revolutionary Guard evidently disagreed, launching a wave of retaliatory strikes against American military installations in Bahrain, Kuwait, and Jordan despite supposedly lacking the means to do so.
Asian markets closed a mixed. Japan's Topix added 0.74%, Hong Kong's Hang Seng climbed 0.52%, and Australia's ASX 200 finished flat.
As of 7:15 am the French CAC 40 in France has dropped by 0.81%, Germany's DAX has lost 0.77% and the UK FTSE 100 is down 0.37%. S&P 500 futures are down 0.20%, the 10-year Treasury yield sits at 4.613%, and the DXY is 101.014.
EURUSD traded sideways in a 1.1378-1.1406 range. Traders are biding their time until today's US CPI release. The euro carries a mild negative bias, due to the surge in Brent prices. Even so, expectations for two more ECB rate hikes by year end continue to limit how far the pair can fall.
GBPUSD bounced in a 1.3342-1.3384 range this morning. Prices are seeing a bit of support after the latest US-Iran clash, on fears that an inflationary jolt from higher oil could push the Bank of England toward another hike..
USDJPY traded narrowly in a 162.07-162.09 band ahead of today's US data. Rising Treasury yields and the fresh spike in oil prices are keeping the pair supported. Separately, Reuters reported that Tokyo plans to attach a footnote to its economic blueprint affirming the need for Bank of Japan independence.
AUDUSD is trading within 0.6913 to 0.6954, buoyed by a 4.1% rebound in Westpac's consumer sentiment gauge to 83.9 from 80.6. That improvement still leaves the index among the weakest readings in its 50-year history, though prospects for further RBA tightening are giving the currency an extra lift.
