Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3440-1.3690
Euro 1.5610-1.5860
Sterling 1.8090-1.8340
WTI Oil (opening level) $86.23
The CAD/USD is opening at 1.3566 ( 0.7372 )
Canadian Dollar is the best-performing G10 currency since the conflict started, supported by resilient equities and Canada’s energy exporter status. While markets now price a Bank of Canada hike in interest rates by year-end. Canada’s outlook sees further easing as unlikely and expects USD/CAD pressure toward a break below 1.35 if Oil moves the right way.
Headlines
· Tensions between the US and Iran are escalating, with President Trump warning Iran about militarily responding to mines placed in the Strait of Hormuz. The US reportedly destroyed Iranian mine-laying vessels, and Trump indicated the conflict might end soon as the operation progresses ahead of schedule, calming oil price jitters. Market volatility was exacerbated by mixed messages from administration officials, including a retracted post by Energy Secretary Chris Wright.
· The IEA is proposing the largest ever strategic oil reserve release to counter rising prices due to escalating Middle East tensions, surpassing the 182 million barrels released in two instances during Russia's invasion of Ukraine in 2022.
· ECB President Christine Lagarde vowed to control inflation despite surging energy prices, expressing commitment to prevent past price spikes. In a Tuesday interview, she assured that Europe is better prepared to absorb current shocks due to stronger policies, though market uncertainty remains high.
· The FT reports that JPMorgan is marking down the value of some of its private credit portfolios, the latest in a string of negative coverage on the value of private credit assets and in some cases limits on investor withdrawal of funds.
Key Points
· Equities: Europe and Asia rebounded while Wall Street stalled, as lower oil eased panic but the Iran risk premium stayed alive.
· Volatility: Iran conflict and oil risk still driving markets, CPI in focus
· Digital Assets: Crypto steady below recent highs, institutional demand stronger for Bitcoin
· Fixed Income: US Treasury yields rebound ahead of US Feb. CPI report.
· Currencies: USD weakens slightly in Asia’s Wednesday session. AUD sets new cycle highs.
· Commodities: Oil choppy on Hormuz Strait concerns and rumors and as IEA mulls strategic reserve release.