USD

The dollar regained some ground on Friday after Thursday’s retreat. Safe‑haven flows persisted as hostilities in the Middle East kept oil prices elevated and investors cautious, but hawkish guidance from the ECB and BoE capped the dollar’s rebound, leaving the DXY index below 100 to close out the week. With no significant US releases today, the buck will continue to take its cues primarily from geopolitical headlines. A 48-hour ultimatum for Iran to reopen the Strait of Hormuz, set by President Trump on Saturday, is set to expire this evening. With no signs yet that Iran will comply, oil continues to rally, helping to keep the greenback on the front foot so far today. Looking further ahead, Tuesday’s PMIs, Thursday’s jobless claims, and speeches later in the week will provide fresh insight into the outlook.

EUR

EURUSD slipped back towards the mid‑1.15s on Friday, coming after a solid rebound in the wake of Thursday’s ECB decision. Uprated inflation forecasts and a hawkish tone from President Lagarde prompted markets to price the risk of hikes as early as April, before a modest US dollar recovery tempered gains. Today’s calendar brings only eurozone consumer confidence and a handful of ECB speeches, so price action is likely to be driven by risk sentiment and oil, with all eyes on Trump’s latest deadline. Our week‑ahead report cautioned that March PMIs, released tomorrow, are likely to undershoot consensus, reflecting firms’ concerns about surging energy costs. Should that prove accurate, we expect renewed pressure on the euro as growth expectations are revised lower.

GBP

Sterling surrendered some of Thursday’s gains on Friday as the dollar firmed into the London close. The pound had rallied sharply after the Bank of England delivered a unanimous hold and highlighted upside risks to inflation from the Middle East, with markets moving to price Bank Rate above 4.5 % by year‑end. We remain sceptical that such an aggressive path will materialise, given a weak domestic growth outlook and building labour‑market slack, and our post‑meeting analysis argued that traders misread the hawkish tone. With no UK data scheduled today, sterling’s direction will be dictated by risk sentiment and oil, with no follow‑up comments from the MPC expected. Tomorrow’s PMI release is the next big domestic event on the horizon; we expect a sharper drop in sentiment than consensus, which should temper sterling strength, while in contrast, Wednesday’s CPI report is likely to be discounted as outdated, limiting FX implications.

CAD

The Canadian dollar traded broadly sideways to end last week, continuing to oscillate around the 1.37 level against the US dollar. A modest rebound in crude prices supported the loonie, while safe‑haven flows into the greenback and hawkish rhetoric from other central banks limited gains. January retail sales, released on Friday, rose 1.1% month on month, below consensus estimates. While dated at this point, these numbers should reinforce growth concerns flagged by the BoC earlier in the month. With no major Canadian data today, USDCAD will continue to track oil prices and geopolitical risk. We expect the BoC to maintain a balanced, data‑dependent stance in the face of conflicting forces, and the loonie to remain range‑bound until traders get a clearer signal from global developments and domestic data later in the week.

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