The Morning Update

The USD is trading lower, while oil continues to rise, equities remain under pressure, and bond yields climb. Stronger-than-expected U.S. data earlier this week, including solid private hiring and robust services activity, along with steady jobless claims, kept markets focused on today’s key nonfarm payrolls report. President Trump fired Homeland Security Secretary Kristi Noem amid controversy and plans to nominate Senator Markwayne Mullin as her replacement, pending Senate confirmation. Twenty-four U.S. states sued the Trump administration over its new 10% global tariffs, arguing the president unlawfully bypassed a recent Supreme Court ruling.

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News Headlines. Trump said the U.S. should have a role in choosing Iran’s next leader and suggested Kurdish forces could challenge Tehran following the killing of Supreme Leader Ali Khamenei. Israel launched fresh strikes on Tehran and Beirut after ordering mass evacuations in the Lebanese capital’s southern suburbs, marking a major escalation in the Iran war. China is in talks with Iran to secure safe passage for oil and LNG shipments through the Strait of Hormuz as the war disrupts a key global energy route. Ukraine offered to help defend Gulf allies against Iranian drones after the U.S. requested support, provided Kyiv’s own security is not compromised.

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In currency markets.  ECB’s Escriva said a rate move at the next meeting is unlikely despite potential inflation effects from the Middle East conflict. Asian currencies traded mostly weaker as safe-haven demand boosted the U.S. dollar amid escalating Middle East tensions. To end the week, the JPY fell 0.20%, the THB dropped 0.55%, and the MYR slipped 0.08% against the USD, while the CNY eked out a modest 0.06% gain against the greenback. The antipodeans weakened as a firm U.S. dollar and cautious risk sentiment weighed on AUD (-0.15%) and NZD (-0.45%). High-yielding currencies faced similar headwinds, with the ZAR down 0.22% and the MXN falling 0.55%

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In commodity markets. Oil is heading for its biggest weekly gain of 26% since 2022 as the Middle East conflict disrupts global energy flows. Gold and silver rebound on safe-haven demand as the U.S. dollar softens, though rising oil prices and inflation concerns limit gains. Agricultural commodities are broadly higher, with soybeans up 0.68%, wheat gaining 1.87%, and lumber rising 1.61%.

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USD/CAD trades near 1.3660 as the U.S. dollar steadies ahead of today’s key U.S. nonfarm payrolls report.

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EUR/CAD remains under pressure as rising oil prices support the Canadian dollar while Middle East tensions weigh on the euro.

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EUR/USD remains under pressure around 1.16 as stronger U.S. data and geopolitical tensions support the dollar while markets await the U.S. nonfarm payrolls report.

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GBP/EUR trades near 1.1516 as markets await Eurozone retail sales data and monitor ECB commentary on the inflation impact of the Middle East conflict.

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GBP/USD edges higher near 1.3365 as the dollar softens ahead of today’s key U.S. nonfarm payrolls report.

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