- Trump announces pause in Iran attacks.
- Oil prices slide
- USD retreats against the G-10 majors as risk sentiment improves.
USDCAD open: 1.4106, overnight range 1.4071-1.4109, close 1.4095, WTI 82.37, Gold 4,095.16
The Canadian is not benefitting from the broad US dollar sell-off. It is under pressure in early NY trading due to lower oil prices but more importantly from widening Canada and US interest rate spreads. The Bank of Canada left its benchmark rate on hold, July 15, but odds are rising for a Fed rate hike on Wednesday.
The US dollar index dropped as the greenback is trading defensively to start the week. Crude prices and Treasury yields fell after Washington paused its bombing campaign against Iran while improved risk appetite boosted US equity futures and European equities. WTI oil prices are trading at 83.20 in NY compared to Friday’s 92.86 level. The sell-off is because of the pause in US attacks on Iran and talk that the IRGC is open to ceasefire talks.
The positive sentiment may prove fleeting as Iran claims to control the Strait of Hormuz and the Houthi’s have disrupted shipping in the Red Sea.
Traders are bracing for a packed central bank calendar, with the FOMC, Bank of England and Bank of Japan all delivering decisions this week.
Asian markets turned defensive following steep losses on Wall Street. Japan's Topix dropped 1.05%, Hong Kong's Hang Seng slid 0.98% and Australia's ASX 200 declined 0.75%.
As of 7:40 am, the German Dax, up 1.67%. the French CAC-40 has gained 0.95% and the UK's FTSE 100 is 0.64% higher. S&P 500 futures are u p 0.87%, the 10-year Treasury yield sits at 4.6357%, and the DXY is 101.32.
EURUSD firmed in a 1.1384 -1.1418 range as Trump's decision to halt strikes on Iran and a 15.3% slide in Brent crude since Friday lifted the pair. However the ECB decision to hold rates steady and concerns for a Fed hike this week are limiting gains. Germany's ifo index climbed to 86.6 from 85.6 in June.
GBPUSD traded poorly in a 1.3324-1.3364 band due to scaled-back BoE rate hike expectations and persistent worries over Britain's fiscal position under the newest version of the Labour government.
USDJPY was steady in a 163.33-163.74 range as improved risk appetite weighed on the pair. The downside was limited due to Fed rate hike speculation.
AUDUSD drifted in a 0.6990 -0.7011 range, underpinned by improved risk sentiment. Prime Minister Albanese said he'll appeal the latest US tariff assault directly to Trump.
US Durable Goods Orders are expected to have risen 0.9% in June compared to 1.4% in May.
