The Morning Update

The USD holds steady, oil prices weaken, equity markets are up, and US yields rise as markets weigh reports of a de-escalation with Iran. The U.S. dollar held steady near multi-month highs, on track for its strongest monthly gain since July, as geopolitical tensions continue to drive safe-haven demand. The greenback remains supported by elevated oil prices and the relative resilience of the U.S. economy, reinforcing its position as the preferred refuge amid global uncertainty. Markets now turn to upcoming economic data to assess whether the dollar’s momentum can be sustained. Global equities are rebounding, with U.S. futures and European markets moving higher as optimism grows that the U.S. may wind down its military campaign against Iran. The rally comes after a sharp selloff, with investors cautiously buying the dip despite ongoing risks around the Strait of Hormuz and elevated oil prices. However, sentiment remains fragile, as unresolved geopolitical tensions and inflation risks continue to cloud the broader market outlook. Elsewhere, oil prices weaken as tentative signs of diplomatic progress ease immediate supply concerns, while gold is strengthening on renewed safe-haven demand. Bitcoin is also firming, holding key levels as investors continue to position in alternative assets amid ongoing geopolitical uncertainty. In focus today, CAD GDP, US Jolts Jobs Opening, Chicago PMI, Consumer Confidence, and a flurry of central bank speakers will help drive direction to currency markets.

‍

In the news. Eurozone inflation jumps to 2.5% in March. Foreign central banks sell US Treasuries in the wake of the Iran war. US petrol prices hit $4 a gallon for the first time since 2022. Asia turns to coal as Iran war chokes off gas supplies. Trump could ask Gulf states to contribute to war costs, says White House. The US trade representative slams the WTO after the e-commerce tariff talks fail. Pete Hegseth's broker looked to buy a defence fund before an Iranian attack. Iranian strike on Kuwaiti power and water plant stokes infrastructure fears. China confirms three ships passed through the Strait of Hormuz.

‍

In currency markets. Against the U.S. dollar, the yen remains under pressure near multi-month lows, with Tokyo stepping up threats of intervention to curb further weakness. Broad dollar strength continues to dominate, with the greenback gaining across major currencies, including the franc, Aussie, and kiwi, as risk aversion and energy-driven inflation concerns weigh on global markets. Commodity-linked currencies have been particularly vulnerable, while upcoming U.S. labour data remains a key risk that could challenge the dollar’s current momentum. CNY firms 0.1%, while Asian currencies gained 0.25% on average, against the USD. Trading currencies are mixed, with NOK weakening 0.65%, KWD easing 0.25%, CHF & NZD down 0.1%, PLN flat, JPY, AUD, SEK, DKK & CZK up 0.1%, MXN advanced 0.3%, and ZAR strengthened 0.4% against the USD.

‍

In commodity markets. Oil prices retreated 0.5%. Natural Gas prices tumbled 2.2%. Gold & Coffee prices advanced 0.9%. Silver prices rallied 3.75%. Copper & Soybean prices up 0.1%, and Wheat prices firmed 0.5%.

‍

CAD weakened to fresh 2026 lows against the U.S. dollar, pressured by ongoing geopolitical tensions and strong safe-haven demand for the greenback. Despite elevated oil prices, concerns that the conflict will weigh on global growth continue to undermine the loonie. Focus now turns to the upcoming Canadian GDP data for signals on the domestic outlook and the Bank of Canada policy path.

‍

EURCAD remains capped near 1.6000 following the latest Eurozone inflation data, which is supporting the euro through firmer ECB expectations. However, upside is limited as softer oil prices continue to weigh on the Canadian dollar. The pair remains rangebound as competing inflation and energy dynamics keep price action anchored.

‍

EUR holds steady above 1.1450 despite firmer inflation data, with Eurozone HICP rising to 2.5% and supporting ECB expectations. The upside remains limited as persistent U.S. dollar strength and geopolitical tensions continue to weigh on the pair. EUR/USD continues to be driven primarily by broader dollar dynamics rather than domestic fundamentals.

‍

GBPEUR firms in early trading as the euro struggles to build on gains despite the release of Eurozone inflation data, which showed prices picking up but not enough to shift the broader narrative. Eurozone HICP rose in March, reinforcing expectations for a cautious ECB, but the impact on the currency remains muted as markets weigh growth risks and geopolitical uncertainty.

‍

GBP firms in early trading, holding above 1.3200 amid a pause in safe-haven demand. The move is supported by UK data showing GDP growth of 0.1% in the final quarter of 2025, indicating a fragile yet stable economic backdrop. However, upside remains limited as ongoing geopolitical tensions and expectations of higher U.S. rates continue to underpin the dollar, leaving markets focused on upcoming U.S. data for further direction.

‍