SUMMARY
U.S. equity futures and the dollar are trading lower this morning following reports from CNN that Israel is preparing to strike Iranian nuclear facilities. As expected, oil prices have moved higher, while safe-haven assets such as the Japanese yen, Swiss Franc, Euro, and gold are seeing increased demand. Additionally, 30-year U.S. Treasury yields have risen above the 5% level once again amid ongoing concerns over U.S. debt and fiscal deficits.
In the UK, stronger-than-expected inflation data has led markets to scale back expectations for rate cuts by the Bank of England. One rate cut is now fully priced in, with markets assigning a 50% probability to a second cut later this year. In response, GBPUSD reached a fresh three-year high.
While no major economic data releases are scheduled for today, attention will turn to the G7 finance ministers and central bankers two-day meeting in Canada. Markets will be closely watching for any remarks on foreign exchange policy, which could introduce further downside risk to the U.S. dollar.
