What's Driving the Markets Today? A Stronger U.S. Dollar, Rising Oil Risks, and Surging Commodity Prices

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

US Dollar        1.4090-1.4340

Euro                1.6120-1.6370

Sterling           1.8900-1.9150

The CAD/USD is opening at 1.4216 ( 0.7034 )

Headlines

• US service-sector activity remained in expansion in June, with the ISM Services PMI easing to 54.0 from 54.5, while the S&P Global measure rose to 51.2 from 50.7. New business remained supportive, helped by tourism and World Cup-related activity, while hiring signals were mixed and cost pressures persisted despite some easing in the ISM price measure.
• Germany’s Construction PMI rose to 44.8 in June 2026 from 42.4, indicating a slower contraction. Housing remained weakest, but commercial and civil declines eased. New orders and employment kept falling at softer rates, costs and delivery times stayed pressured, and confidence improved but stayed negative.
• A Qatari LNG carrier was hit by a projectile near Oman as it exited the Strait of Hormuz, testing the US-Iran ceasefire and reviving shipping concerns. The attack added a small risk premium back into oil prices while European gas prices jumped to a one-month high amid renewed uncertainty over traffic through the strait.
• Arabica coffee futures surged as much as 19% on Monday, the steepest one-day rise in 26 years, as El Niño-related weather concerns extended a one-month rally that has lifted prices by 45%. Widespread expectations of a bumper crop in top producer Brazil have been tempered by poor weather that has delayed harvesting, prompting some growers to hold back sales in anticipation of higher prices. Meanwhile, cocoa futures jumped 13% to their highest since January as persistent rains across key West African growing regions added to supply concerns, squeezing funds holding sizeable short positions.
• Oil prices and especially LNG rose after a Qatari LNG ship was struck by a projectile near the Omani coast as it exited the Strait of Hormuz, raising unease among shipowners while once again testing a US-Iran agreement intended to halt attacks and keep the narrow strait open. EU TTF gas futures rose to near a one-month high at EUR 46/MWh (USD 15.5/MMBtu), but with oil prices staying subdued amid ample supply. Focus on EIA’s Short-term Energy Outlook.
• Gold trades softer for a second day as the Iranian attack revived inflation concerns. Overall, bullion remains rangebound as it attempts to shift from capitulation to consolidation, supported by softer US data and a less hostile dollar and yield backdrop. However, with short-dated US yields still signalling a risk of a rate hike later this year, a further easing in rate expectations is needed to support a more durable recovery.

Key Points

• Equities: US chip strength lifted Wall Street, Europe paused near records, Asia was mixed as Korea’s AI-memory trade cooled.
• Volatility: Monday's tech-led rebound faded overnight on an Asian chip selloff
• Digital Assets: Crypto equities and ETFs rallied Monday while spot eased overnight
• Commodities: Coffee and cocoa jump on El Niño weather concerns, while Hormuz tensions add a modest risk premium.
• Fixed Income: US bonds steady as 10-year JGB yield hits 1997 high
• Currencies: Bullish USD futures bet extend to decade high