The United States and Iran have agreed to halt attacks against each other and are set to resume peace talks in Doha, Qatar, on Tuesday, following several days of retaliatory strikes triggered by an Iranian projectile hitting a cargo vessel last Thursday [1][2]. This diplomatic development has led to heightened market sensitivity, particularly regarding the stability of the Middle East and its broader impact on global risk sentiment [1][2]. According to US officials, both Washington and Tehran 'will stand down for now' after recent exchanges of fire near the Strait of Hormuz, a critical waterway for global oil shipments [2].
The Canadian Dollar (CAD) has held its ground, with USD/CAD trading around 1.4190 and remaining in negative territory for the third consecutive day during Asian hours on Monday [1]. The depreciation of the US Dollar (USD) is attributed to the diplomatic opening between the US and Iran, as well as lower oil prices, with West Texas Intermediate (WTI) crude trading at approximately $69.80 [1]. Lower oil prices, following reports of the US-Iran agreement, could challenge the commodity-linked CAD due to Canada's status as a major crude exporter [1].
Gold prices (XAU/USD) have also declined, attracting sellers to around $4,060 amid uncertainty surrounding the US-Iran talks and persistent hawkish expectations from the Federal Reserve [2]. Iranian officials have maintained a firm stance, with Foreign Minister Abbas Araghchi asserting that responsibility for the Strait of Hormuz lies solely with Tehran and warning that any attempt to bypass Iran's preferred route could lead to 'tension and escalation' [2]. This ongoing uncertainty has contributed to inflation concerns and increased bets on future US rate hikes, which in turn weigh on non-yielding assets like gold [2].
Both articles highlight that traders are currently pricing in a 59.7% probability of a Federal Reserve rate hike as soon as September 2026, according to the CME FedWatch Tool [1][2]. The upcoming US Nonfarm Payrolls (NFP) report, due Thursday, is expected to be a key indicator for the Fed's interest rate trajectory, with forecasts pointing to June job growth of 114,000 and an unemployment rate steady at 4.3% [1][2].
CONCLUSION
The agreement between the US and Iran to pause hostilities and resume talks in Doha has led to cautious optimism in currency and commodity markets, with the Canadian Dollar holding steady and gold prices declining amid ongoing uncertainty. Market participants remain focused on Middle East developments and upcoming US labor data, both of which are expected to influence risk sentiment and the Federal Reserve's policy outlook.