Gold (XAU/USD) consolidates modest gains on Monday as the US Dollar (USD) softens amid improving market sentiment, with traders reacting to fresh diplomatic developments aimed at ending the US-Iran war.
USD/JPY trades with a slightly softer tone on Monday as the Japanese Yen (JPY) finds modest support amid a broadly weaker US Dollar (USD), with traders assessing fresh geopolitical developments, including reports of potential ceasefire talks between the United States and Iran.
TD Securities strategists Robert Both and Emma Lawrence highlight that Canadian rates are opening weaker, with yields tracking US moves and geopolitical tensions. They expect CAD employment to show only a modest rebound and see imported volatility dominating.
Fresh data from the Institute for Supply Management (ISM) showed on Monday the Services PMI easing a tad to 54 in March from 56.1, coming in short of expectations at 55 and signalling some loss of momentum in the sector.
United States ISM Services New Orders Index rose from previous 58.6 to 60.6 in March
United States ISM Services PMI below forecasts (55) in March: Actual (54)
United States ISM Services Prices Paid: 70.7 (March) vs 63
United States ISM Services Employment Index: 45.2 (March) vs previous 51.8
OCBC strategists Sim Moh Siong and Christopher Wong argue that market hopes for de-escalation in the US–Iran conflict look premature for Brent.
MUFG’s Senior Currency Analyst Lloyd Chan highlights that Asia is highly exposed to potential energy flow disruptions through the Strait of Hormuz. An extended energy shock would raise inflation, worsen current accounts and hurt growth, leaving KRW, PHP and THB vulnerable.
TD Securities analysts expect US ISM Services to soften in March as geopolitical uncertainty from Iran weighs on sentiment. They forecast the index to fall to 54.2, reversing February’s gain, with most components slowing and employment slipping back into contraction.
EUR/GBP trades with a negative bias on Monday as diplomatic efforts to end the US-Iran war lift market sentiment and support risk-sensitive currencies, with the British Pound (GBP) relatively outperforming the Euro (EUR).
