The Morning Update

The USD inched higher, oil prices dropped, equity markets rallied, and US yields edged lower. The USD eased Wednesday as improving prospects for a US-Iran agreement and fading geopolitical tensions reduced demand for the currency’s safe-haven appeal, while Secretary of State Rubio confirmed offensive operations had concluded and Washington’s focus had shifted to securing shipping routes in the strait. Crude tumbled after reports the US and Iran are nearing a preliminary deal that could pave the way for broader nuclear negotiations and ease fears of supply disruptions. Precious metals advanced as easing Middle East tensions and lower oil prices helped soften inflation concerns, while Defense Secretary Hegseth and Secretary Rubio signaled that the ceasefire remains intact. Bitcoin rallied on the peace talk and renewed optimism over US crypto regulation The ADP Employment Change report is due later this morning, with markets watching for signs the US labor market is stabilizing after several months of subdued hiring growth

News Headlines: The White House is reportedly nearing a preliminary memorandum with Iran to end the conflict, with discussions focused on curbing Tehran’s nuclear activity, easing U.S. sanctions, and restoring transit access through the Strait of Hormuz. The report added that Washington expects Iran to respond to key provisions within the next 48 hours. China’s Foreign Minister called for a comprehensive ceasefire in the Iran war after meeting Iranian counterpart in Beijing, signaling renewed diplomatic efforts to end the two-month conflict. The U.S. military is reviving its jungle warfare school in Panama after 25 years as the Trump administration intensifies its focus on Latin America, including potential operations targeting cartels, Cuba and the Panama Canal.

In currency markets. Global currency markets were driven Wednesday by improving risk appetite and fading geopolitical tensions, with the dollar easing as optimism over a potential US-Iran agreement reduced demand for safe-haven assets. Commodity-linked and emerging-market currencies gained support from lower oil volatility and calmer market conditions, while investors also monitored upcoming U.S. labor data and broader shifts in global growth expectations. Indonesia tightened restrictions on dollar purchases to support the rupiah after the currency fell to fresh record lows, prompting renewed central bank intervention in FX markets.

In commodity markets. Oil prices dropped 8.03%. Natural Gas lost 1.00%. Gold gained 3.23%.  Silver climbed 5.92%. Copper is up 2.98%. Coffee slipped 0.37%. Soybean edged 0.48% lower, and Wheat moved 1.78% lower.

USD/CAD moved lower on Wednesday as easing geopolitical tensions and optimism over a potential U.S.-Iran agreement pressured the U.S. dollar, while crude high prices continues to support the Canadian dollar due to Canada’s role as a major energy exporter. Traders are also looking ahead to Canada’s employment report on Friday.

EUR/CAD moved higher on Wednesday as the euro gained support from growing expectations of further ECB tightening, while easing Middle East tensions and softer oil prices weighed on the Canadian dollar despite improving broader risk sentiment.

EUR rallied after ECB board member Piero Cipollone signaled that persistent inflation pressures could increase the likelihood of further rate hikes, while improving prospects for a ceasefire in the Middle East boosted broader market sentiment and reduced demand for safe-haven assets.

GBP/EUR edged slightly lower as the euro found support from renewed ECB tightening expectations, while sterling softened amid cautious sentiment ahead of upcoming UK economic data and broader uncertainty around the growth outlook.

GBP strengthened as optimism over a potential U.S.-Iran agreement improved global risk sentiment and reduced demand for the U.S. dollar’s safe-haven appeal after President Trump paused “Project Freedom” in the Strait of Hormuz, citing “great progress” in mediated talks with Tehran.

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