USD / CAD - Canadian dollar sinks on geopolitical tensions
- Oil prices soar after US attacks Iran.
- Markets on alert for Iran retaliation.
- US dollar rises on safe-haven demand
USDCAD: open 1.3795, overnight range 1.3738-1.3798, close 1.3735, WTI 74.58, Gold 3367.46
The Canadian dollar sank on the news that the US attacked Iranian nuclear sites which severely hampered Iran’s ability to build nuclear weapons. The timing of the attack was a surprise for Iran, as Trump had given the country two-weeks to negotiate.
WTI oil prices soared from 73.19 to 78.39 in Asia but quickly erased most of the gains after Iran failed to retaliate.
Gold also spiked in a textbook knee-jerk move, jumping from 3364.79 to 3388.96 after the airstrikes. But just as quickly, the metal lost its shine and gave back the gains, as traders slipped into a wait-and-see stance.
Asia markets closed in negative territory. The ASX 200 and Japan’s Topix both fell 0.36%, while Hong Kong’s Hang Seng bucked the trend and climbed 0.67%.
European markets are down led by a 0.61% drop in the French CAC 40 index while the German Dax is off 0.37%. S&P 500 futures are flat, while the U.S. 10-year Treasury yield sits at 4.397%.
EURUSD dropped like a stone, falling to 1.1454 from Friday’s 1.1524 close in early Asian trading. It briefly rebounded to 1.1520 after German May PMI data surprised to the upside, with the composite index climbing to 50.4 from 48. Economists at S&P Global sounded optimistic that Germany may finally exit its “one step forward, one step back” growth cycle. However, any euro momentum was short-lived as weaker-than-expected Eurozone PMI figures dragged the single currency lower again.
GBPUSD followed a similar rollercoaster, sliding from 1.3447 to 1.3397, rebounding to 1.3450, and then tumbling to 1.3371 after UK data disappointed. S&P economists noted some bright spots, saying that while the British economy remains sluggish, improving business conditions are easing recession fears.
USDJPY continued to climb overnight, moving from 146.09 to 147.95 by early New York trading. Rising oil prices—usually a drag on Japan’s energy-dependent economy—didn’t dent appetite for dollars. Safe-haven demand for the yen was nowhere to be found despite the geopolitical fireworks, and traders ignored the modest uptick in Japan’s manufacturing PMI, which rose to 50.4 in June from May’s 49.4.
AUDUSD didn’t fare well in the risk-off environment, falling within a 0.6376–0.6449 range under the weight of U.S. dollar demand. Australian Manufacturing PMI held steady at 51, but it wasn’t enough to inspire much confidence.
US data is limited to the second tier S&P Global PMI’s and existing home sales.
