Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3770-1.4020
Euro 1.6050-1.6300
Sterling 1.8580-1.8830
WTI Oil (opening level) $92.97
The CAD/USD is opening at 1.3894 ( 0.7197 )
A ceasefire agreement between Israel and Lebanon renewed hopes for diplomatic progress. This, in turn, weighs on the crude oil prices and undermines the commodity-linked CAD.
Furthermore, stronger-than-expected US jobs data, including the May ADP private payrolls and JOLTS job openings, suggested a resilient US labor market. These reports might prompt traders to raise their expectations that the Fed will keep interest rates higher for longer, lifting the USD against the CAD. Markets are now pricing in nearly a 42% odds of a Fed rate hike
Headlines
· The Middle East crisis remains fluid. Following Wednesday's escalation, which saw US forces strike an Iran-bound tanker and Iran retaliate with attacks against US bases in Bahrain and Kuwait as well as commercial shipping, Israel and Lebanon have agreed to a conditional ceasefire. However, the broader regional conflict remains unresolved and risks to energy supplies persist. Traffic through the Strait of Hormuz, a vital waterway that normally handles around one-fifth of global oil and LNG shipments, has recovered modestly but remains well below pre-conflict levels, continuing to support a significant geopolitical risk premium across energy markets.
· The Republican-led House voted to curb US military involvement in Iran, marking a rare rebuke of President Trump and highlighting growing concerns within his own party about the economic and political costs of the conflict. While the resolution is unlikely to immediately affect military operations, as it still requires Senate approval, the vote underscores rising opposition to a prolonged war.
· ISM Services PMI rose to 54.5 in May from 53.6 in April, beating expectations and marking a three-month high. Business activity, new orders, and inventories strengthened, while employment contracted for a third month amid hiring freezes. Price pressures hit their highest since August 2022, driven by fuel and petroleum-related products, as backlog growth slowed and supplier delivery performance weakened further.
· US private payrolls rose by 122,000 in May, the strongest gain since January 2025 and above expectations. Hiring was broad-based, led by education and health services and trade/transportation/utilities. Pay growth held at 4.4% for job-stayers and rose to 6.6% for job-switchers.
· The US administration vowed to impose 10%–12.5% tariffs on major trading partners, including the EU and UK, over alleged links to goods produced with forced labor.
· US factory orders rose 4.8% in April to $662.7 billion, the strongest gain in 11 months and above expectations. Durable goods jumped 8%, led by a surge in nondefense aircraft and transportation, with gains in fabricated and primary metals, while computers and electronics slipped 0.7%. Nondurable goods orders increased 1.4%.
Key Points
· Equities: US and Europe slipped on oil and geopolitics, Asia followed lower as investors trimmed risk after an artificial intelligence-led rally
· Volatility: VIX rises, payrolls in focus, Middle East tensions, Broadcom disappoints
· Digital Assets: Bitcoin near three-month lows, ETF outflows persist, crypto proxies weaker, hedging activity increases
· Commodities: Gold bounces from key support (again), oil fluctuates on mixed Middle East signals
· Fixed Income: Treasuries fall on strong ADP numbers
· Currencies: Dollar stays firm on Middle East tensions; USDJPY near 160 again