The Morning Update

The USD is strengthening as oil rallies, equities face pressure, and bond yields climb. Stronger-than-expected U.S. services activity and improving hiring data supported the dollar yesterday, with markets now focused on jobless claims today and Friday’s key nonfarm payrolls report. A U.S. trade court ordered refunds for tariffs imposed under emergency powers after the Supreme Court struck down the levies. U.S. crypto legislation faces new uncertainty as banks reject a White House compromise, drawing criticism from President Trump. President Trump nominated former Fed Governor Kevin Warsh as the next Federal Reserve chair, though hurdles remain for confirmation and delivering the rate cuts the president seeks.

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News Headlines. Israel’s strikes on Tehran and Iran’s retaliatory missile and drone attacks on U.S.-aligned Gulf states are escalating regional tensions and raising the risk of prolonged disruption to the Strait of Hormuz. Europe faces a tougher and more costly task rebuilding gas storage as Middle East tensions disrupt LNG supplies and tighten global markets. ECB’s Nagel warned a prolonged Iran conflict could lift euro-zone inflation and weigh on growth if energy prices remain elevated.

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In currency markets.  The CNY rebounded from a 1-month low after the central bank set a stronger-than-expected fixing, as Beijing opened its annual parliament meeting and set a 2026 growth target of 4.5–5%. Asian currencies were trading mostly lower as a resilient U.S. dollar kept pressure on regional FX. Sentiment remained cautious amid Middle East tensions and ahead of key U.S. economic data. The JPY and IDR each slipped 0.17% against the greenback, while the KRW fell 0.63%. The antipodeans also weakened, with AUD and NZD down 0.37% and 0.27%, respectively, while EM currencies saw heavier losses as ZAR and MXN dropped 1.00% and 0.40%.

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In commodity markets. Oil prices extended their rally—rising 2.5% today and nearly 18% over the past week—as escalating U.S.–Israel tensions with Iran heightened fears of supply disruptions and tightened global energy markets. Gold (+0.51%) and silver (+0.95%) extend gains for a second session as safe-haven demand rises amid escalating Middle East tensions. Agricultural commodities are broadly higher, with soybeans up 0.49%, wheat gaining 1.29%, and lumber rising 0.63%.

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USD/CAD trades near 1.3645 as a stronger U.S. dollar—supported by upbeat U.S. data and safe-haven demand—offsets CAD strength from higher oil prices.

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EUR/CAD trades heavy as stronger oil prices support the Canadian dollar while euro moves remain tied to ECB expectations.

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EUR/USD rebounds toward 1.1625 as easing safe-haven demand offsets a firmer dollar supported by stronger U.S. economic data.

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GBP/EUR holds steady near 1.1490 as markets await Eurozone retail sales data and monitor ECB commentary on energy-driven inflation risks.

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GBP/USD hovers near 1.3350 as stagflation concerns weigh on the pound while safe-haven demand supports the dollar.

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