Iran Threatens Strait of Hormuz as US Attacks Continue, Markets Turn Risk-Off

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

US Dollar        1.3560-1.3810

Euro                1.5770-1.6020

Sterling           1.8110-1.8360

WTI Oil (opening level) $76.34

The CAD/USD is opening at 1.3689 ( 0.7305 )

CAD drew support from higher Oil prices, which have reignited concerns about a fresh inflation wave in Canada, as investors fear rising energy costs could force central banks to keep interest rates higher for longer.

The upside of the USD/CAD pair could be limited as the USD could further appreciate amid safe-haven demand linked to escalating tensions in the Middle East.

Headlines

• Trump warned of ongoing US attacks on Iran until it no longer posed a threat, indicating the conflict could last a month or longer. Iran declared the Strait of Hormuz closed, threatening vessels trying to pass through.
• The US may limit Nvidia's H200 chip exports to 75,000 units per Chinese firm, affecting market access. AMD's chips count toward this cap. Total shipments to China could hit one million, with restrictions impacting major tech companies.
• The ISM Manufacturing PMI rose slightly to 52.4 from January's 52.6, exceeding expectations of 51.8 in February. The increase was driven by a surge in prices paid, climbing to 70.5, the highest since June 2022. Order backlogs increased by 5 points to 56.6, the highest since May 2022. Employment improved slightly to 48.8, though still below the expansion threshold. However, new orders decreased to 55.8, and production fell to 53.5. Three demand indicators remain in expansion territory.
• Japan's unemployment rate increased to 2.7% in January 2026, higher than the forecast and the highest since July 2024. Employment decreased by 290,000, while the labor force fell to 70.08 million. The participation rate was 63.5%. The jobs-to-applicants ratio was 1.18.
• Germany's retail sales fell 0.9% in January 2026, missing the expected 0.2% drop, after a 1.2% rise in December. Non-food sales dropped 1.7%, while food sales were flat and e-commerce rose 2.5%. Yearly retail trade grew 1.2%, easing from December's 2.5% gain.
• Trump announced ongoing US combat operations in Iran, citing Iran's missile development capable of reaching America and its pursuit of nuclear weapons. He indicated operations are ahead of schedule and may extend the timeline as necessary

Key Points

• Equities: Risk-off returned: US held flat, while Europe and Asia sold off as oil jumped on Middle East escalation.
• Volatility: Vix elevated, futures risk-off, Iran uncertainty, energy-inflation focus
• Digital Assets: BTC steady, ETH resilient, IBIT/ETHA strong, etf inflows supportive, geopolitics watch
• Fixed Income: US Treasury yields rebound sharply on inflation fears from higher energy prices
• Currencies: USD rebounds as safe haven as Iran conflict concerns rise
• Commodities: European natural gas spiked 50% Monday. Oil rebounds. Gold supported but off highs