The Morning Update

The USD is flat, oil prices rally, equity markets are down, and US yields rise as the US says the Iran MOU 'over'. The U.S. dollar is holding near a one-week high in early trading as renewed tensions in the Middle East bolster safe-haven demand after President Trump said the interim Iran agreement was "over." Investors are also looking ahead to today's Federal Reserve meeting minutes for further clues on the interest rate outlook, with markets expecting policymakers to reinforce a broadly hawkish stance despite last week's softer U.S. jobs data. Global equity markets are under pressure after President Trump declared the U.S.-Iran ceasefire "over," reviving geopolitical concerns and prompting investors to reduce risk exposure. U.S. futures are lower, bond yields have moved higher, and investors are awaiting today's Federal Reserve meeting minutes for further guidance on the interest rate outlook. Elsewhere, oil prices are rallying as renewed U.S.-Iran tensions raise concerns over potential supply disruptions through the Strait of Hormuz. Gold and Bitcoin are weakening as a firmer U.S. dollar and expectations of a hawkish Federal Reserve prompt investors to take profits. Today's focus will be the FOMC Minutes and updates on the Iran-US conflict to provide direction to the currency markets.

‍

News Headlines. Trump says interim deal with Iran is 'over' at NATO summit. Oil jumps over 6% to a two-week high after Trumps comments on Iran. Trump says he has ordered cutoff of US trade with Spain. Ukraine's Zelensky signs 'drone deals' with three countries. Crypto firms prepare defences as quantum threat to encryption draws nearer. Big Tech joins Calgary Stampede oil bash, as Canada courts data centers. Russia tries to jam Musk's Starlink systems to counter Ukrainian drones. Beijing is looking at curbing overseas access to China's top AI models. Meta says US states are seeking $1.4 trillion in penalties in August youth safety trial.

‍

In currency markets. Against the U.S. dollar, major currencies are softening in early trading as investors adopt a cautious stance ahead of today's release of the Federal Reserve meeting minutes. Markets will be looking for further insight into Chair Kevin Warsh's policy stance and whether the Fed continues to signal that at least one additional rate hike remains possible this year.

‍

In commodity markets. Oil +6.00% | Nat Gas +1.65% | Gold -2.50% | Silver -3.90% | Copper -2.10% | Palladium -5.00% | Coffee +1.20% | Cocoa +3.10% | Soybeans +0.20%

‍

CAD is firmer in early trading, supported by higher oil prices after renewed tensions in the Middle East lifted crude, although USD/CAD remains above 1.4150 and the broader technical outlook continues to favour the U.S. dollar. Investors are likely to remain cautious ahead of the release of the Federal Reserve minutes, which could provide further guidance on the U.S. interest rate outlook and drive near-term direction for the loonie.

‍

EURCAD is little changed in early trading, with the Canadian dollar gaining modestly against the euro despite a 6% rally in oil prices. While stronger crude is providing some support for the loonie, the policy divergence between the Bank of Canada and the European Central Bank continues to favour a firmer EUR/CAD over the medium term.

‍

EUR is edging higher against the U.S. dollar in early trading, recovering modestly as traders square positions ahead of today's Federal Reserve meeting minutes despite ongoing geopolitical tensions in the Middle East. Investors will also continue to monitor comments from ECB policymakers, who have warned that energy-related inflation risks could keep the central bank cautious on future rate decisions.

‍

GBPEUR is holding steady near one-year highs as the euro remains under pressure despite stronger German industrial production. Recent comments from Bank of England policymaker Catherine Mann reinforced a hawkish stance, signalling she would support a rate hike if inflation expectations deteriorate, while the European Central Bank continues to stress a cautious, meeting-by-meeting approach.

‍

GBP is holding steady against the U.S. dollar in early trading as investors balance a resilient Bank of England policy outlook against renewed political uncertainty in the UK following recent leadership developments. Attention now turns to today's Federal Reserve meeting minutes, with markets remaining cautious for clues on the Fed's policy path and whether officials continue to favour another rate hike this year.