U.S. Consumer Sentiment Rebounds for First Time in 6 Months

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

US Dollar        1.3450-1.3690

Euro                 1.5590-1.5830

Sterling            1.8310-1.8570

WTI Oil (opening level) $71.94

The CAD/USD is opening at 1.3573 ( 0.7367 )

Meaningful Canadian data remains limited on the economic calendar through the next couple of weeks. CAD traders will be cautious heading into key Canadian inflation figures due at the end of the month; however, the data vacuum between now and then leaves CAD entirely at the mercy of how markets feel about the USD and Middle East tensions from one day to the next.

Headlines

·    Iran and Israel exchanged further strikes overnight, with Israel focusing its attacks on Iran’s missile launching sites and killing another military official, while Iran launched further drones and missiles. Israel has avoided targeting oil fields and crude oil export facilities, but Iran reported an explosion at a natural gas processing plant associated with Iran’s giant South Pars gas field on Saturday. Crude oil prices rose again overnight by more than four dollars per barrel, but had settled back closer to Friday’s close, up less than a dollar for August Brent.

·    A senior US official said that Trump vetoed a plan by Israel to kill Iran’s Supreme Leader, Ayatollah Khamenei.

·    The University of Michigan's consumer sentiment index for the US increased to 60.5 from 52.2 in May and April, surpassing expectations of 53.5. This marks the first rise in six months, with gains in current conditions and future expectations. Despite this, sentiment remains 20% below its December 2024 level, when confidence temporarily surged post-election.

·    China’s retail sales grew 6.4% in May, the fastest pace since December 2023, exceeding all expectations, offering a confidence boost to Beijing. However, the strong consumption was boosted by an annual shopping festival and government subsidies highlighting the risk it may may not represent a turnaround in sentiment

Key Points

·    Equities: Israel-Iran tensions, tech/airlines down, energy/defense up, Fed and earnings ahead

·    Volatility: VIX spikes to 20.8, futures elevated, geopolitical risks drive choppiness

·    Digital assets: Bitcoin above $106K, ETH steady, IBIT/ETHA dip, FOMC in focus

·    Fixed Income: Yields rose on Friday on oil price spike from Iran-Isreal conflict

·    Currencies: US dollar sell-off stumbled Friday, yen weak on higher yields, crude prices

·    Commodities: Crude volatility remains elevated on binary price outcome of Middle East war