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CAD rises on oil rebound, Middle East de-escalation hopes

  • USD/CAD depreciates as the commodity-linked Canadian Dollar gains on the oil prices rebound.
  • Emirati officials seek UNSC approval for a multinational military action to restore Strait navigation, potentially using force.
  • The US Dollar weakens as Trump indicated that the US will withdraw from Iran conflict within two to three weeks.

USD/CAD remains subdued for the second successive trading day, hovering around 1.3910 during the Asian hours on Wednesday. The pair depreciates as the commodity-linked Canadian Dollar (CAD) receives support from higher oil prices, given Canada’s status as the largest crude exporter to the United States (US).

West Texas Intermediate (WTI) oil price rebounds after registering over 4% losses in the previous day, trading around $98.60 per barrel at the time of writing. Oil prices rebound as the Emirati officials are lobbying for a United Nations Security Council (UNSC) resolution to authorize a multinational military mission to restore navigation in the strait, elevating risks of broader regional escalation.

The UAE is also urging the United States (US) and allied nations across Europe and Asia to form a coalition to clear mines, escort commercial vessels, and, if required, secure strategic positions along the waterway.

The USD/CAD pair also weakens as the US Dollar (USD) softens, weighed down by improving risk appetite amid rising hopes for Middle East peace. US President Donald Trump stated on Tuesday that the United States (US) would be “leaving very soon” from the Iran war, noting that a withdrawal could take place within two to three weeks.

Trump further emphasized that a formal agreement with Tehran is not a necessary condition for ending hostilities. On the Iranian side, President Masoud Pezeshkian expressed a willingness to de-escalate regional tensions if specific guarantees are met.

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GBP edges higher as Middle East war de-escalates

  • The Pound Sterling ticks up against its major peers amid significant de-escalation in the Middle East war.
  • Both the US and Iran have expressed willingness to end the month-long war.
  • Investors await the US ADP Employment Change and the ISM Manufacturing PMI data for March.

The Pound Sterling (GBP) trades slightly higher against its major currency peers, rising 0.12% to near 1.3242, during the Asian trading session on Wednesday. The British currency gains as demand for riskier assets has improved, following the announcement from Iran that is willing to end the war with the United States (US).

Pound Sterling Price Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.11%-0.06%-0.05%-0.08%-0.14%0.18%-0.22%
EUR0.11%0.05%0.07%0.03%-0.02%0.30%-0.11%
GBP0.06%-0.05%0.04%-0.01%-0.06%0.27%-0.13%
JPY0.05%-0.07%-0.04%-0.02%-0.05%0.23%-0.12%
CAD0.08%-0.03%0.01%0.02%-0.04%0.27%-0.12%
AUD0.14%0.02%0.06%0.05%0.04%0.33%-0.07%
NZD-0.18%-0.30%-0.27%-0.23%-0.27%-0.33%-0.40%
CHF0.22%0.11%0.13%0.12%0.12%0.07%0.40%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

According to the Iranian state news agency, Iran’s President Masoud Pezeshkian told European Union (EU) Council President António Costa on Tuesday that his country is ready to end the war with the US, but it needs certain guarantees.

“We possess the necessary will to end this conflict, provided that essential conditions are met, especially the guarantees required to prevent repetition of the aggression,” Iranian President Pezeshkian said, according to Euronews.

Iran’s readiness for peace after United States (US) President Donald Trump’s truce call has diminished fears of further damage to energy infrastructure in the gulf region; however, there seems to be no significant decline in the oil price as energy supply constraints will sustain until the restoration of the infrastructure.

Meanwhile, fresh hopes of Middle East war de-escalation has diminished the safe-haven demand of the US Dollar, while its downside is expected to remain limited, as higher oil prices would keep discouraging Federal Reserve (Fed) officials from easing monetary conditions.

In Wednesday’s session, investors will focus on the US ADP Employment Change and the ISM Manufacturing PMI data for March.

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NZD/USD retreats from weekly top, slides to 0.5730 as Fed rate hike bets support USD

  • NZD/USD turns lower after touching a fresh weekly high during the Asian session on Wednesday.
  • Inflation fears and Fed rate hike bets remain in play, limiting USD losses and capping spot prices.
  • Delayed RBNZ rate hike bets due to prolonged energy supply shock further weigh on the NZD.

The NZD/USD pair attracts some sellers following a modest Asian session rise to the 0.5760 area, or the weekly top, and stalls the previous day’s recovery move from over a four-month low. Spot prices slide to the 0.730 region in the last hour and seem vulnerable to prolonging the downtrend witnessed over the past two months or so.

The optimism led by US President Donald Trump’s signal that the US would wind down current hostilities with Iran within two to three weeks remains limited amid reports that the UAE is pushing for military action to reopen the Strait of Hormuz. Adding to this, the US is still deploying additional troops and assets in the Middle East, raising the risk of a broader regional conflict. This keeps inflation concerns and Federal Reserve (Fed) rate hike bets in play, which acts as a tailwind for the US Dollar (USD) and exerts some pressure on the NZD/USD pair.

Meanwhile, the New Zealand Dollar (NZD) is undermined by expectations that the Reserve Bank of New Zealand (RBNZ) could wait until Q4 before raising interest rates amid concerns that a prolonged energy supply shock would dent economic growth. Apart from this, the latest data published by RatingDog showed China’s Manufacturing PMI dropped to 50.8 in March from 52.1. This counters Tuesday’s upbeat official PMIs and points to a fragile recovery in the world’s second-largest economy, which further weighs on antipodean currencies, including the Kiwi.

The aforementioned fundamental backdrop validates the near-term negative outlook for the NZD/USD pair, though traders might opt to wait for geopolitical developments before placing aggressive directional bets. In the meantime, Wednesday’s US economic docket – featuring the release of the ADP report on private-sector employment, the monthly Retail Sales, and the ISM Manufacturing PMI – will be looked upon for some impetus. The market attention will then shift to the release of the closely-watched US Nonfarm Payrolls (NFP) report on Friday.

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US Dollar Index remains below 100.00 as Trump’s remarks improve risk appetite

  • US Dollar Index declines as safe-haven demand fades amid growing optimism over easing Middle East tensions.
  • Trump said that the US may withdraw from the Iran conflict within two to three weeks.
  • Fed’s Powell said long-term inflation expectations remain well anchored.

The US Dollar Index (DXY), which measures the value of the US Dollar (USD) against six major currencies, is extending its losses for the second successive day and hovering around 99.80 during the Asian hours on Wednesday.

The Greenback weakens amid fading safe-haven demand amid a moderation in Middle East tensions. US President Donald Trump stated on Tuesday that the United States (US) would be “leaving very soon” from the Iran war, noting that a withdrawal could take place within two to three weeks. The comments reinforce earlier remarks suggesting that US strategic objectives have largely been fulfilled, raising expectations of a relatively swift resolution to the conflict.

Iranian President Masoud Pezeshkian expressed a willingness to de-escalate regional tensions if specific guarantees are met. However, Foreign Minister Abbas Araghchi took a firmer stance, asserting that Tehran is not seeking a temporary ceasefire but rather a complete termination of the war. He stressed the need for binding assurances against future aggression as well as compensation for damages, highlighting lingering uncertainty around the conflict’s resolution.

Moreover, Federal Reserve (Fed) Chair Jerome Powell said earlier that long-term inflation expectations remain well anchored, easing concerns that higher energy prices will quickly lift inflation and reduce the urgency for policy action.