Fiery rhetoric from Trump dispels ceasefire hopes
The greenback traded in a range on Wednesday as markets swung between de‑escalation hopes and renewed war fears. The dollar eased early in the session as investors speculated that a primetime address by President Trump would outline an exit strategy from the conflict. When the speech instead promise
USD
The greenback traded in a range on Wednesday as markets swung between de‑escalation hopes and renewed war fears. The dollar eased early in the session as investors speculated that a primetime address by President Trump would outline an exit strategy from the conflict. When the speech instead promised “weeks” of additional strikes and offered no timetable to reopen the Strait of Hormuz, risk appetite collapsed. Haven buying lifted the DXY back above 100 overnight, erasing much of the dollar’s losses from the previous two days. Meanwhile, yesterday’s ISM manufacturing PMI for March printed at 52.7, but the report was hawkish under the hood: supply delays due to shipping disruptions drove the prices paid index sharply higher, while new orders slowed and employment remained soft. Today’s calendar is light, with weekly jobless claims and February trade data due before tomorrow’s non‑farm payrolls. Liquidity will thin ahead of Good Friday. With energy markets volatile and the war still escalating, we expect haven flows to dominate and look for another attempt at recent highs if payrolls surprise on the upside.
EUR
The euro benefited from a brief burst of optimism on Wednesday but quickly gave back gains as Trump’s speech revived safe‑haven demand for the dollar. EURUSD slipped below 1.16 after the address, though with the single currency still some distance away from recent lows. With most European markets closing early for Easter, the data calendar now starts to dry up, and liquidity is likely to prove thinner than usual today. Events in the Middle East will likely remain the major catalyst for the euro, meaning that any recovery will be capped until there is clear progress toward a ceasefire.
GBP
Sterling’s fortunes mirrored broad market swings on Wednesday. Early on, the pound extended gains above 1.33 against the dollar as hopes of a ceasefire lifted risk assets, before Trump’s bellicose tone later in the day prompted a reversal of fortunes, sending GBPUSD back down towards the 1.32 level. Today, the Bank of England’s Decision Maker Panel will be closely watched, with traders expecting to see a pickup for inflation expectations, driven by higher energy costs. This is likely to keep the BoE cautious and rate expectations supported, even if we remain somewhat sceptical around the actual risk of rate hikes later in the year. Still, with no other major UK releases due ahead of the Easter break, this should provide a degree of support for the pound, which should otherwise take its cue from oil prices and global risk sentiment.
CAD
The Canadian dollar enjoyed modest support on Wednesday as early optimism over a potential ceasefire, coupled with firm crude prices around $100 per barrel, saw USDCAD dip below 1.39. However, Trump’s commitment to “extremely hard” strikes on Iran swiftly reversed this overnight as investors sought the safety of the greenback. Canada’s domestic data offered little respite: the S&P Global manufacturing PMI slipped to 50.0 in March, the lowest in three months as US tariffs and war‑related uncertainty weighed on demand. There are no major Canadian releases before tomorrow’s US jobs report, so the loonie’s direction today will hinge on oil prices and global risk sentiment. Given a resumption of safe‑haven flows, we expect USDCAD to remain anchored near the upper end of its recent range.