Middle East on Edge: Israel Targets Iran’s Nuclear Program, Oil Jumps 13%

Today's expected range for the Canadian Dollar against the major currencies:

US Dollar        1.3510-1.3750

Euro                 1.5580-1.5820

Sterling            1.8340-1.8650

WTI Oil (opening level) $72.74

The CAD/USD is opening at 1.3635 ( 0.7334 ) 

Headlines

·    Israel launched a series of attacks on Iran, targeting its nuclear program and ballistic missile sites. Israeli Minister of Defense Israel Katz has also declared a special state of emergency throughout the entire state of Israel, anticipating some retaliation from Iran with reports saying Iran has launched over 100 drones in the last few hours.

·    Crude oil prices spiked as much as 13%, the biggest jump since 2022, while gold rose above USD 3400, before prices retraced some of their early gains amid reports no crude production or storage facilities had been hit in the Israeli strike. The region accounts for a third of global crude production Strait of Hormuz the world’s most critical oil transit chokepoint that sees more than 20 million barrels of crude pass through daily.

·    Trump said that he may “have to force” Fed Chair Powell to cut interest rates, calling the Fed Reserve Chair a “numbskull” for not cutting rates. Earlier this week, Vice President JD Vance called the Fed not lower rates more as “monetary malpractice”. After yesterday’s weak jobless claims data, the odds for a rate cut at next week’s FOMC meeting remain at virtually zero, while odds of a July cut have shifted higher to slightly above 25%.

·    US initial jobless claims stayed at 248,000 in early June, above the expected 240,000, while continued claims jumped to 1.956 million, the highest since the end of 2021 and together with a slowdown in hiring, it suggests that out-of-work people are struggling to find employment

·    US producer prices increased 0.1% in May 2025, below the forecasted 0.2%. Goods prices rose 0.2%, with tobacco up 0.9%, while jet fuel fell 8.2%. Service costs edged up 0.1%, with machinery and vehicle wholesaling margins rising 2.9%. 

Key Points

·    Equities: Oracle surges, Boeing drops, Trump tariffs return, Israel-Iran risk

·    Volatility: VIX +4% to 18; defensive hedging rises

·    Digital assets: Bitcoin/ETH slide; IBIT, ETHA dip but inflows steady

·    Fixed Income: Yields drop on weak US labor market data, geopolitical tensions

·    Currencies: USD fights back from yesterday’s sell-off on geopolitical tensions.

·    Commodities: Crude spikes and gold sees haven demand as Israel attacks Iran