Trump Escalates Threats on Iran, Raising Oil Risks and Boosting USD Demand

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

US Dollar        1.3800-1.3950

Euro                1.5970-1.6220

Sterling           1.8330-1.8580

WTI Oil (opening level) $114.22

The CAD/USD is opening at 1.3924 ( 0.7182 )

USD receives support as the Iran war lifts energy prices, fueling inflation fears and prompting a more hawkish Federal Reserve stance.

Markets have fully priced in that the Federal Reserve will hold the federal funds rate steady this month, with borrowing costs likely to remain unchanged through year-end. USD index is holding ground around 100, as the USD gets support on increased safe-heaven demand amid the uncertainty of the war.

Headlines

• Trump intensified threats against Iran ahead of his Tuesday 8 p.m. ET deadline, warning of strikes on civilian infrastructure, including bridges and power plants, if no deal is reached to reopen the Strait of Hormuz. Markets grew more optimistic after Trump said Iranian negotiators wanted a deal, though Iran rejected a 45-day ceasefire and offered a 10-point plan Trump dismissed, while warning that it would respond to such strikes by ramping up its own attacks on energy infrastructure in the Gulf, which could heighten the global fuel squeeze and damage the world economy
• G-7 finance ministers vowed to closely coordinate on the Middle East and flagged extreme market volatility and sharp oil price swings. Japan’s Finance Minister Katayama declined to comment on specific levels amid rising government bond yields.
• ISM Services PMI fell to 54 in March from 56.1 in February (below 55 forecast), signaling slower growth. Business activity and employment weakened, prices jumped on higher oil and fuel, supplier deliveries slowed, inventories and backlogs eased, and new orders rose faster, with ISM pointing to the Iran conflict and higher oil prices.
• Rivals OpenAI, Anthropic PBC, and Alphabet Inc.’s Google are coordinating efforts to curb Chinese competitors underscoring the severity of a concern raised by US AI companies that some users, especially in China, are creating imitation versions of their products that could undercut them on price and siphon away customers while posing a national security risk.

Key Points

• Equities: U.S. stocks edged higher, Europe was closed for Easter Monday, and Asia was mixed
• Volatility: Iran deadline, Strait of Hormuz risk, VIX 24.17
• Digital Assets: BTC ~$69k, ETH ~$2.1k, IBIT inflows, ETHA inflows
• Fixed Income: US bond yields rise as inflation concerns lower rate cut hopes
• Currencies: Dollar trades mixed ahead of Trump’s deadline
• Commodities: Tightness lifts crude, gold softer amid focus on inflation and liquidity stress