The Morning Update

The USD slips, oil prices weaken, equity markets rally, and US yields are mixed on signals to end the Iran conflict. The U.S. dollar fell for a third consecutive day as investors reacted to signals from President Trump that the conflict with Iran could end sooner than expected, easing safe-haven demand. Despite the pullback, the dollar remains supported by ongoing geopolitical uncertainty and the U.S.’s position as a major energy producer benefiting from higher oil prices. Analysts say the USD is likely to stay resilient unless the Strait of Hormuz fully reopens and Middle East oil production normalizes. Global equities rallied as oil prices fell sharply and President Donald Trump signalled the Middle East conflict could end quickly, lifting risk sentiment. U.S. stock futures advanced while Europe’s Stoxx 600 posted its biggest gain since April, as investors welcomed the drop in energy prices. The move reflects a relief rally across global equity markets, though uncertainty around the Strait of Hormuz and regional tensions continues to pose risks. Elsewhere, oil prices tumbled as easing concerns over Middle East supply disruptions reduced risk premiums, while gold strengthened on continued safe-haven demand. At the same time, Bitcoin rallied toward $71,000, supported by improving market sentiment and renewed investor interest in risk assets. Today sees a light economic calendar, so focus will be on the US ADP Business Optimism Index and updates on the Iran/US war for direction.

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In the news. Oil slides as Trump says war will end 'very soon'. China's exports surge 21.8% in the first two months of this year. Poland to build the EU's first anti-drone shield. Amazon holds an engineering meeting following AI-related outages. Shares of China's battery champion soar 10% as AI boom boosts demand. "Exceptional' wetness points to climate future, say scientists. G7 'stands ready' to release emergency oil reserves. Feds announce nearly $1 billion for domestic defence innovation, including Bombardier aircraft. Iran bets on endurance, energy disruption to outlast US & Israel. TikTok gets green light to stay in Canada, reversing earlier ban.

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In currency markets. The Australian dollar and Mexican peso rallied against the U.S. dollar as improving risk sentiment and demand for higher-yielding currencies lifted commodity and emerging-market FX. Meanwhile, China’s yuan strengthened after record exports surged 22% in the first two months of 2026, boosting trade inflows and exporter dollar conversions. CNY strengthens 0.5%, while Asian currencies firmed 0.1% on average against the USD. Trading currencies rebound, with PLN down 0.1%, NOK flat, JPY, KWD, NZD, ZAR up 0.1%, CHF, SEK, DKK, & CZK firming 0.25%, while MXN & AUD rallied 0.7% against the USD.

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In commodity markets. Oil prices tumble 5.5%. Natural Gas eased 0.5%. Gold strengthened 1.6%. Silver prices rallied 5.2%. Copper prices advanced 1.3%. Coffee & Wheat prices weakened 0.9%, and Soybean prices slipped 0.3%.

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CAD holds steady against the U.S. dollar after giving back a small portion of recent gains, with elevated oil prices linked to Middle East tensions continuing to support the currency. Investors are also turning their attention to upcoming Canadian employment data, which could influence expectations for Bank of Canada policy. Recent figures showed Canada’s unemployment rate around 6.5%, the lowest in about 16 months, highlighting a relatively resilient labour market despite mixed job growth.

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EURCAD held steady as modest euro gains against the U.S. dollar were offset by support for the Canadian dollar from elevated oil prices. Cautious market sentiment and ongoing geopolitical tensions kept the cross largely range-bound.

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EUR inched higher against the U.S. dollar, with EUR/USD holding near 1.1650 as markets weighed easing oil prices and cautious risk sentiment. Comments suggesting the Middle East conflict could end soon supported the euro’s recovery, though the dollar retained some safe-haven demand. Investors are now turning their focus to upcoming U.S. inflation data for further direction.

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GBPEUR held steady as markets repriced expectations of the Bank of England's rate path higher amid rising inflation risks linked to the energy shock. The prospect of a more hawkish BoE provided support for sterling, offsetting broader uncertainty tied to the Middle East conflict. Meanwhile, weaker German industrial production data weighed on the euro, helping keep the pair broadly stable.

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GBP strengthened against the U.S. dollar, supported by improving global risk sentiment and reduced demand for the safe-haven greenback. Sterling was also lifted by a sharp shift in expectations for the Bank of England's interest rate, with markets now pricing in the possibility of a rate hike later this year rather than the earlier anticipated cuts. However, ongoing geopolitical uncertainty in the Middle East may temper further gains.