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Surprisingly soft Canadian inflation data sent the Canadian Dollar lower yesterday against most other currencies.
Canadian CPI data released yesterday was surprisingly soft, just as the US CPI was last week, which tends to be interpreted as the oil price shock of spring 2026 flowing out of the system. Month-on-month, there was deflation of 0.4%, compared to the 0.2% which had been expected. As at about the same time President Trump announced he would be imposing 50% tariffs on select Canadian goods, which put more dovish pressure on the Loonie. The Canadian Dollar weakened over the day yesterday, notably in the USD/CAD currency pair which advanced quite strongly.
Conversely, New Zealand CPI was just a tick higher than was expected, showing a rate over the quarter of 1.5% while 1.4% was expected.
In the Forex market, the US Dollar advanced yesterday to a 1-week high but has lost some ground since yesterday's New York session. The greenback has still not broken above key DXY resistance at 101.39. The USD/JPY currency pair remains in focus as it consolidates very close to its 39-year high below ¥163. Since today's Tokyo open, the strongest major currency has been the New Zealand Dollar, while the weakest has been the British Pound.
The USA / Iran confrontation has continued to produce kinetic conflict, with the USA and Iran trading fire for a tenth consecutive day. Iran has fired on Kuwait, Bahrain, and Jordan, and killed US military personnel. Trump is threatening to start targeting infrastructure in an attempt to drive Iran to the negotiating tabIe. I have been writing here for a while that the US administration's pursuit of a "good deal" with the regime in Iran will never yield fruit and is incompetence and wishful thinking taken to an infinite level. Unfortunately, I am being proven right. The Strait of Hormuz is effectively 99% closed, with just a tiny trickly of crude oil shipping getting through, or any shipping for that matter. Spot WTI Crude Oil has risen again and trades above $82 while Brent Crude Oil is trading above $90. The price of crude oil has been dampened slightly by reports that the USA is still actively trying to get Iran to come back to the table, and that mediators are proposing another short-term truce.
Markets are awaiting the release of Canadian CPI (inflation) data today, which could move the value of the Loonie if it surprises. The expectation is for a month-on-month contraction of 0.2%.
Stock markets have recovered somewhat in recent hours after aa mostly poor day yesterday. Earnings reports will be released soon for a number of large tech companies and a focus on this will increasingly drive equity markets over the short term.
Precious metals such as Silver and Gold have seen quite firm rises in price over recent hours, but both are still quite close to their long-term low prices. Gold technically remains within a bearish trend but has broken above an inner descending trend line, while Silver looks even stronger. I still would not be interested in buying Gold or Silver, but if the action continues they could be interesting for day traders.
Bitcoin seems to have finally broken above the key resistance at $65,233. If the price continues to trade above this level, it will be a significant technical bullish sign.
There will be a release of UK unemployment claims today (Claimant Count Change).