Oil and the US dollar are dipping slightly today, while stock futures and bonds rise on the back of easing geopolitical tensions. The positive shift comes as a top Iran diplomat is set to travel to Pakistan as US takes new step to ease flows of oil and gas.
Emerging FX are looking through the Middle East conflict as carry-trade keeps momentum, while currencies like the NOK and Aussie lead the majors year-to-date. Looking ahead, investors are bracing for a massive macro “Super Week” kicking off on April 27. Six major central banks, including the US, Eurozone, UK, and Japan, will announce their latest monetary policy decisions. Although markets widely expect a coordinated pause with all rates held steady, the real focus will be squarely on their forward guidance to see exactly what comes next.
CAD: February retail sales miss expectations
Canadian retail sales saw a modest gain in February, rising by 0.7% to reach $72.1 billion. While this marks a solid step forward, the headline number actually fell slightly short of the 0.9% market forecast. The overall increase was primarily fueled by the auto sector, with motor vehicle and parts dealers seeing strong demand across the country. Meanwhile, an early advance indicator from Statistics Canada suggests this positive momentum is sticking around, pointing to an estimated 0.6% sales increase for March.
Looking beneath the surface, core retail sales also showed resilience by climbing 0.6% for the month. This underlying strength was heavily supported by shoppers opening their wallets at supermarkets and general merchandise stores. However, the data painted a slightly softer picture than analysts anticipated, as the retail sales excluding autos figure of 0.5% missed the expected 0.8% mark. Interestingly, consumers seemed to prefer traditional shopping trips in February, as e-commerce sales dipped slightly to account for a smaller slice of total retail trade.
Despite these fresh domestic numbers, the Canadian dollar’s performance this week is largely being driven by broader global currents. The USD/CAD pair has bounced near the 1.37 level, remaining stubbornly rangebound as markets navigate shifting Middle East headlines and fluctuating oil prices. The loonie is also feeling the extra weight of sluggish CUSMA trade negotiations, which are creating a noticeable layer of overhead pressure. Traders are now largely keeping their powder dry until next Wednesday, when both the Bank of Canada and the Federal Reserve are widely expected to hold interest rates steady.
EUR: Facing economic headwinds
The euro’s late‑April price action continues to reflect resilience without conviction, as geopolitical volatility increasingly collides with a softening growth backdrop. EUR/USD has unwound most of its March war‑driven losses and remains anchored above 1.17, but repeated failures in the 1.18–1.19 zone highlight the absence of a catalyst for a decisive upside break. Headline swings around the Strait of Hormuz have produced sharp moves in oil, yet FX follow‑through has been limited, reinforcing the sense that markets are now trading uncertainty itself, rather than a clear escalation or peace outcome.
Fundamentals have tilted modestly more negative. Recent German downgrades and weak industry PMIs underline how the conflict is feeding directly into Europe’s confidence, investment, and energy‑sensitive growth channels. The Eurozone composite PMI slipping to 48.6, back into contraction territory, underpins concerns that growth momentum is fading just as energy prices remain elevated.
This complicates the ECB outlook. Inflation risks tied to energy argue for caution on easing, while weakening activity constrains the case for aggressive tightening. Markets remain anchored around two convictions: an ECB hold in April and a hike in June, with expectations for two hikes in 2026 broadly intact. That provides some structural support for the euro, but it has not been enough to displace oil prices and global equity performance as the dominant drivers of EUR/USD.
Relative rates dynamics initially helped underpin euro resilience, with the 2‑year EUR/USD swap spread now around 20bp tighter than pre‑war levels, reflecting the view that the ECB is more responsive to energy shocks than the Fed. However, recent sessions suggest that risk sentiment has overtaken rates as the primary influence. In practice, EUR/USD’s ability to hold above 1.17 now depends less on ECB expectations and more on equity stability, even when oil prices push higher.
Absent a genuine ECB surprise or a clear geopolitical resolution, the euro looks set to remain supported, but capped, with conviction still in short supply.
MXN: Peso momentum fades
The momentum that lifted emerging market LatAm FX has faded this week, and the Mexican peso is feeling the strain. USD/MXN remains locked in a 17.30, 17.50 range, as a firmer US dollar, supported by lingering geopolitical tensions and stalled diplomacy, keeps the peso on the back foot. With markets largely shrugging off renewed USMCA tariff rhetoric, near-term direction remains elusive.
Domestic data hasn’t helped. February retail sales rose just 3.1% YoY, well below the 4.5% forecast, pointing to a sharper-than-expected slowdown in consumer demand. At the same time, core inflation remains sticky at 4.27%, slightly above expectations, complicating Banxico’s policy calculus as it balances cooling growth against persistent price pressures. This mix has left the peso underperforming regional peers, notably the BRL and COP.
What breaks the stalemate? Attention now turns to a pivotal week ahead. The Fed’s policy decision on Wednesday and Mexico’s Q1 GDP on Thursday will be key catalysts. Absent a dovish Fed surprise or a meaningful upside growth shock at home, the peso is likely to continue consolidating rather than set new yearly highs.
Market snapshot
Table: Currency trends, trading ranges & technical indicators
Key global risk events
Calendar: April 20-24
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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.
