– WTI firms on supply disruption concerns.
– Trump bails early on G-7-Trade deals scarce
– US dollar trading sideways due to conflicting forces
USDCAD: open 1.3565, overnight range 1.3563-1.3584, close 1.3572, WTI 71.33, Gold 3385.97
The Canadian traded quietly and in a narrow band ahead of today’s US data dump. News that Trump and Carney are working toward reaching a trade and security deal in 30 days failed to stir any interest. Traders are biding their time until Wednesday’s FOMC meeting,
WTI oil prices rose from 69.56 to 72.11 after Trump warned that “Tehran should evacuate.” Prices dropped to 71.33 in early NY as Tehran remains standing. Oil traders are concerned about a supply disruption if Iran follows through on threats to close the Hormuz Strait, which would choke about 20% of the world’s petroleum liquids.
Donald Trump was the main event at the G-7 gathering, with global leaders lining up to flatter him. Canada’s Prime Minister Mark Carney led the charge, showering Trump with praise about American leadership on global issues.
The combination of wars in the Middle East and Ukraine rattled oil markets and weighed on equity sentiment. Oil prices jumped after Trump warned that “Tehran should evacuate,” then slipped back when no immediate escalation followed. The ASX 200 finished flat, the Hang Seng declined 0.34%, and Japan’s Topix rose 0.35% following the Bank of Japan’s latest policy decision. European equities are broadly weaker, with the DAX falling 1.28%, the CAC 40 losing 1.08%, and the FTSE 100 down 0.45%. S&P 500 futures are off by 0.59%. A bearish Citi gold forecast projecting a drop to 3300 helped push XAUUSD from 3403.37 to 3396.04. Meanwhile, the US 10-year Treasury yield dipped from 4.445% to 4.416%.
EURUSD traded in a 1.1543–1.1572 range, staying soft after ECB official Joachim Nagel flagged rising oil prices as a threat to price stability. The euro drew limited support from the stronger-than-expected German ZEW survey, as traders remained cautious due to a lack of movement in US-EU trade talks.
GBPUSD traded in a 1.3542–1.3592 range, drifting aimlessly despite Trump reaffirming support for a UK trade pact, based on nothing more than personal affinity. Markets are in pause mode ahead of the Fed and Bank of England policy decisions this week, with no rate changes anticipated.
USDJPY firmed in a 144.40–145.11 range, climbing modestly despite safe-haven interest in yen. Trump’s comments on Tehran stirred geopolitical nerves, but the Bank of Japan’s decision to slow its tapering plans due to external risks helped cap gains.
AUDUSD climbed 0.6504–0.6544 range, benefiting from hopes that the Israel-Iran conflict would remain contained. Traders are looking ahead to today’s US data for signs that could revive expectations for Fed rate cuts.
Today’s US data includes May Retail Sales (forecast -0.7% m/m), Industrial Production, Capacity Utilization, and Business Inventories.
