USD

A fragile two‑week ceasefire between the United States and Iran kept FX markets on edge yesterday. After tumbling on Wednesday as news of the truce broke, more recent price action has seen the buck stabilise, assisted by FOMC helping to keep upside inflation pressure top of mind for traders. That sets the scene for today’s big release: March US CPI figures. Markets expect headline inflation to jump 0.9% MoM, lifting annual CPI to around 3.4% as higher energy costs are passed through to consumers. But crucially, core CPI is predicted to have risen around 0.3% in March, only marginally higher than in February. A more robust core reading could quickly re-anchor expectations for a June Fed rate hike, given recent guidance, leaving risks asymmetrically skewed to the upside today, even if our central expectation is for a softer dollar further out.

EUR

The euro’s rally continued on Thursday as investors pared back safe‑haven dollar positions. EURUSD traded higher to around 1.17, reflecting optimism that oil flows through the Strait of Hormuz may resume, though we caution against over‑interpreting the move. Today’s focus will be on US CPI and the ongoing ceasefire negotiations, which could dictate risk sentiment; no major euro‑area data is scheduled. We continue to expect EURUSD to trade in the mid‑1.16‑1.17 range absent a durable peace or a significant US inflation surprise, and we stay alert to renewed hostilities that could undermine the single currency.

GBP

Sterling extended its gains yesterday, rising to the mid-1.34s after risk appetite improved and traders unwound dollar positions. A lack of major UK data meant that broader market sentiment dominated price action, though the weak RICS house price survey earlier in the week reinforced our view that domestic fundamentals remain fragile. Today, attention turns to US CPI and Canadian employment data; a strong US inflation print would likely cap sterling’s rally, while a durable ceasefire could see GBPUSD test higher levels. With no significant UK releases until next week, we expect sterling to track global risk sentiment and energy prices. Our bias remains cautious: sterling’s gains are vulnerable to renewed hostilities or a hawkish shift in Fed expectations.

CAD

The Canadian dollar firmed modestly on Thursday as risk assets rallied and traders priced in a tentative peace deal, even as oil prices remained volatile. USDCAD drifted toward 1.38 as investors unwound safe‑haven dollar trades, though with the ceasefire still fragile and shipping through the Strait of Hormuz limited, oil markets remain susceptible to sharp swings, keeping the loonie sensitive to headlines. Today brings Canada’s March labour force survey alongside the US CPI. We expect Canadian employment to rebound modestly after February’s steep decline, with a gain of around 15k and the unemployment rate holding near 6.7%, consistent with a labour market treading water. Even so, that would be a notable improvement over recent months, enough, we suspect, to keep the loonie on the front foot if US data only manages to meet expectations.

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