Today's expected range for the Canadian Dollar against the major currencies:
US Dollar 1.3870-1.4120
Euro 1.6070-1.6320
Sterling 1.8640-1.8890
WTI Oil (opening level) $84.73
The CAD/USD is opening at 1.3990 ( 0.7148 )
Oil slumped after Trump talked up another peace deal, with markets this time appearing increasingly willing to believe it may be for real, despite the lack of confirmation from Tehran.
Crude Oil fell to a two-month low amid expectations of a surge in supply from tankers currently stranded in the Gulf. Some of the optimism has also been driven by a recent, albeit still modest, increase in the flow of oil, gas and refined products through the Strait of Hormuz.
Goldman Sachs now assumes oil exports from Gulf producers could normalize by late August, a scenario that may be achieved if Hormuz flows recover to around 70% of pre-war levels, supported by ongoing pipeline rerouting efforts.
Headlines
· US-Iran peace deal signals: In yet another about-turn, President Trump cancelled planned military strikes against Iran and said a deal could be signed as soon as this weekend, triggering a sharp cross-asset reversal. Oil prices fell, equities and gold rallied, bond yields declined, and the dollar weakened as markets moved to price in a reduced geopolitical risk premium.
· However, after more than thirty similar announcements over the past couple of months, investors have become increasingly cautious about taking such signals at face value. As always, it remains crucial to watch the response from Tehran. Iran's semi-official Fars news agency reported on Thursday that officials had yet to approve the text of any agreement with the United States, citing an unnamed source, while negotiations reportedly remain deadlocked over several key issues.
· US PPI (May): Producer prices rose 1.1% month-on-month and 6.5% year-on-year, the fastest pace since November 2022, driven by Iran war-related energy pressures. Core PPI ex-food and energy rose 0.4% month-on-month, below the 0.5% estimate, providing a modest offset.
· ECB rate hike: The European Central Bank raised its deposit rate by 25 basis points to 2.25%, the first hike since 2023, citing inflation pressures from the Iran war and prolonged Strait of Hormuz disruptions. The ECB reiterated it will not pre-commit to future action; markets are pricing another 25bp move in September.
· US tariff refunds: The US Treasury refunded nearly $22 billion in tariff revenue in May — roughly equal to duties collected during the month — following a Supreme Court ruling that struck down a major component of Trump's trade policy.
· USMCA uncertainty: Trump said he is "not looking to renew" the US-Mexico-Canada Agreement, upending expectations for a July review milestone. Canada's trade minister said side deals would eventually resolve disputes.
Key Points
· Equities: US tech rebounded sharply, Europe edged higher after the ECB hike, Asia surged as Iran risk eased.
· Volatility: Iran optimism, VIX below 20, Fed meeting ahead, risk-on sentiment, upside skew.
· Digital Assets: Bitcoin consolidates, Ether steady, crypto equities strong, Fed in focus
· Commodities: Oil hits two-month low as Trump talks up Iran deal; gold rebounds
· Fixed Income: US treasury yields reverse lower on hopes for Iran war ceasefire
· Currencies: USD rally Thursday reversed on slide in crude oil prices, US treasuries