Oil prices jumped more than 4% Sunday evening after the US-Iran ceasefire broke down over a weekend marked by military exchanges and sharp rhetoric. President Trump said the bilateral ceasefire was officially over, putting renewed focus on risks to shipping through the Strait of Hormuz. Both WTI and Brent crude rose about 4%, to $74.50 and $79 a barrel, respectively, as traders moved quickly to price in renewed risks to supply and transport flows.
It is not unusual to see markets balancing two competing signals after the breakdown of a ceasefire. On one hand, the end of the truce raises the risk of further disruption in the Gulf and adds a fresh geopolitical premium to crude, with potential spillovers into yields and the dollar. On the other, the administration has signaled it is still willing to hold talks with Tehran, suggesting diplomacy has not fully broken down. For now, the mix has spilled into higher risk aversion, with Treasury yields rising and the US dollar starting the week with a renewed bid.
Traders still appear to infer that neither Western nor Iranian leaders have much appetite for a wider military conflict. Markets are treating the latest attacks as serious but localized disruptions, rather than the start of a broader US-Iran war in 2026. That assumption should limit the upside in crude unless shipping through the Strait of Hormuz faces a more sustained threat.
The timing also matters for broader markets. This week’s CPI report could test the calm seen over the last couple of weeks: a soft print would keep the summer risk backdrop intact, while a hotter core reading could pull a July hike back into play. With Fed guidance becoming less predictable and several officials due to speak this week, the dollar and rates market may be more sensitive to an upside inflation surprise than to another benign reading.
What’s happening in markets this week?
This week’s calendar is packed, with the main focus on the US CPI. Investors will start with US small business sentiment and the monthly budget balance (Tue), before turning to the key CPI report and Chair Warsh’s first semiannual testimony before Congress (Wed). China will also be in focus with trade data (Wed), while the World Cup semifinals add a lighter backdrop midweek. The main question for markets is whether softer inflation can support the summer risk tone without reviving concerns about consumer fatigue.
The second half of the week stays busy. US PPI, jobless claims, industrial production and retail sales are due (Thu), alongside major global releases from the UK, eurozone, India and Japan. China’s GDP, retail sales, industrial production and FDI data will also help shape the global growth read (Fri), while the University of Michigan sentiment and inflation expectations will close the US data week. Central-bank commentary will remain important throughout, especially if Fed officials echo Warsh and Waller on a less rigid approach to forward guidance. Earnings also pick up, with major US banks reporting early in the week, followed by names such as GE, Johnson & Johnson and Netflix.
Canada jobs steady, CAD still heavy
Canada’s labour market held steady in June, even as the details remained mixed. Employment rose by 18,000, a touch above consensus, while the unemployment rate edged down to 6.5%, the lowest since January. Hours worked also rose 0.2%, adding to signs that growth improved in Q2. Still, the labour market is not tight, and slack remains visible after a soft start to the year.
Manufacturing lost 17,000 jobs in June and remains down sharply over the first half of the year, showing the pressure on trade-exposed sectors. Services did the heavy lifting, adding 62,000 jobs, while wage growth ticked up to 3.3% but stayed well below the stronger pace seen earlier in the spring. Regionally, Quebec led the gains, while Ontario shed jobs and Alberta’s unemployment rate rose as labour-force growth outpaced hiring.
For the Bank of Canada, the report doesn’t change the overall narrative from the past year. Slower population growth means weaker job creation is less alarming than it would have been a year ago. On a per-worker basis, conditions look better, and that supports the view that unemployment could edge lower over the second half of the year. Even so, the elevated jobless rate should keep wage pressure contained and leave the BoC cautious.
For the USD/CAD, the data is not strong enough to change the broader setup. The pair remains supported above 1.41, with the chart still showing momentum after the break above 1.40, though RSI looks stretched. This week brings another test, beginning with renewed US Iran tensions, higher yields and a stronger US Dollar. Domestically, existing home sales (Tue), manufacturing sales and wholesale trade (Wed), the Bank of Canada rate decision and housing starts (Thu), plus international securities data (Fri) don’t seem to be enough macro catalysts to help move the needle down for the USD/CAD. Unless Canadian data surprise strongly or US yields fall, dips in USD/CAD may remain hard to sustain.
Banxico stays patient, MXN holds firm
Banxico’s June minutes showed more confidence in disinflation, but not enough to restart the easing cycle. The board kept the policy rate at 6.50% and signaled that a prolonged hold remains the preferred path. Slack in the economy, peso strength and fading inflation shocks support that stance. Still, sticky services inflation keeps Banxico cautious and limits the case for near-term cuts.
The latest CPI downside surprise matters more for rates than the minutes themselves. It narrowed the gap between actual inflation and Banxico’s forecasts, helping local rates rally. Yet the front end remains anchored because the central bank is still committed to staying on hold. The bigger move came further out the curve, as investors trimmed expectations for policy tightening next year.
For MXN, the setup remains constructive. USD/MXN is trading near 17.53, above the 20-day and 100-day moving averages but still below the 200-day average near 17.73, which points to near-term consolidation. Rate spreads have narrowed, but Mexico still offers strong carry, while overall macro backdrop continues to support the currency. Global sentiment and how it affects US yields and the Dollar may matter more for the Peso this week.
Market snapshot
Table: Currency trends, trading ranges & technical indicators
Key global risk events
Calendar: July 13 – 17
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
