Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.4010-1.4260
Euro 1.6020-1.6270
Sterling 1.8800-1.9050
WTI Oil (opening level) $73.78
The CAD/USD is opening at 1.4140 ( 0.7072 )
The USD strengthened againstall its G10 peers on renewed geopolitical tensions and as higher oil prices fueled speculation that the Fed will raise rates to cool inflationary pressure. Overall, however, the changes so far are limited with the US Dollar index trading in the same range as last week at around 101 having touched 101.22 earlier in the Asian session.
Headlines
· Oil jumps after US and Iran exchanged fresh missile strikes as tensions around the Strait of Hormuz intensified. Iran claimed it had closed the strait, a move rejected by the US, and said it would not resume negotiations until Washington honours previous commitments on transit rights and oil exports. Meanwhile, the US launched new strikes targeting Iranian air defence systems, coastal radar installations, and missile and drone capabilities. In retaliation, Iran carried out drone and missile attacks against US allies across the Middle East, including Bahrain, Kuwait, and Qatar.
· Fed and US economic data focus: Fed Chair Warsh will make his first congressional appearance since taking the helm after pledging to scale back forward guidance on the rate outlook. Tuesday’s House Financial Services Committee hearing will be preceded by June CPI figures. Then on Wednesday, shortly after the release of PPI data, Warsh will testify before a Senate committee. Earlier this month in Sintra, Portugal, Warsh said price risks have come down in recent weeks and repeated his determination to bring inflation back to the US central bank’s 2% target.
Key Points
· Equities: Wall Street rose before earnings, Europe closed mixed as tech slipped, Asia fell on Monday's Iran-driven risk-off
· Volatility: Weekend Iran strikes lifted oil and dented risk appetite, vol futures repriced ahead of CPI and Warsh
· Digital Assets: Crypto majors slid on the Iran risk-off bid, Circle secured its US national trust-bank charter
· Commodities: Oil rallies, metals retreat as renewed Middle East tensions dominate markets
· Fixed Income: US 2-year yields rises to 15-month high amid rate hike concerns
· Currencies: JPY and AUD weakness underpin broad but moderate dollar bid
· Macro: Little of note ahead of CPI, PPI and Fed Chair Kevin Warsh's congressional testimony later this week