Author: Consultant

Oil prices rose in Asian trade on Wednesday, extending a 4 per cent gain from the previous session on worries that the Iran-Israel conflict could disrupt supplies.

Brent crude futures rose 26 cents, or 0.3 per cent, to US$76.71 a barrel by 0440 GMT. U.S. West Texas Intermediate crude futures rose 35 cents, or 0.5 per cent, to US$75.19 per barrel.

U.S. President Donald Trump on Tuesday called for Iran’s “unconditional surrender” as the Iran-Israel air war entered a sixth day.

The U.S. military is deploying more fighter aircraft to the region to bolster its forces, three officials said on Tuesday.

Analysts said the market was largely worried about supply disruptions in the Strait of Hormuz, which carries a fifth of the world’s seaborne oil.

Iran is OPEC’s third-largest producer extracting about 3.3 million barrels per day (bpd) of crude oil, but spare capacity among producers in the Organization of the Petroleum Exporting Countries and their allies can readily cover this.

“Material disruption to Iran’s production or export infrastructure would add more upward pressure to prices. However, even in the unlikely event that all Iranian exports are lost, they could be replaced by spare capacity from OPEC+ producers … around 5.7 million barrels a day,” said Fitch analysts in a client note.

Brent crude oil prices have gained about US$10 a barrel over the past two weeks, and Fitch analysts said they expect the geopolitical risk premium in oil prices to be contained at around US$5 to US$10.

In another sign of the market’s jitters, Brent crude’s premium to Middle East benchmark Dubai soared above US$3 a barrel on Wednesday, market sources said, hitting its highest since late September 2023 according to LSEG data.

Markets are also looking ahead to a second day of U.S. Federal Reserve discussions on Wednesday, in which the central bank is expected to leave its benchmark overnight interest rate in the 4.25 per cent-4.50 per cent range.

However, the conflict in the Middle East and the risk of slowing global growth could push the Fed to potentially cut rates by 25 basis points in July, sooner than the current market expectation of September, said Tony Sycamore, market analyst with IG.

“The situation in the Middle East could become a catalyst for the Fed to sound more dovish, as it did following the October 7, 2023, Hamas attack,” Sycamore said.

Lower interest rates generally boost economic growth and demand for oil.

Confounding the decision for the Fed, however, is that the Middle East conflict also creates a new source of inflation via surging oil prices.

Crude oil futures rose about 3% Tuesday, after President Donald Trump demanded Iran’s unconditional surrender and threatened its Supreme Leader Ayatollah Ali Khamenei.

The U.S. crude oil contract for July delivery increased $2.07, or 2.88%, to $73.84 per barrel by 1:11 p.m. ET, while global benchmark Brent for August rose $2.18, or 2.98%, to $75.41.

Trump threatened Khamenei as “an easy target,” warning Iran’s leader that U.S. “patience is wearing thin.” The president then called for Iran’s unconditional surrender on his social media platform Truth Social.

“We know exactly where the so-called ‘Supreme Leader’ is hiding,” Trump said in a social media post. “He is an easy target, but is safe there – We are not going to take him out (kill!), at least not for now. But we don’t want missiles shot at civilians, or American soldiers. Our patience is wearing thin.”

Oil prices had closed lower Monday on reports that Iran was seeking a ceasefire with Israel, but those hopes faded as the conflict went on for a fifth day with Trump taking a harder line against Iran. Trump left the Group of Seven summit in Canada early and demanded that everyone evacuate Iran’s capital city.

“Simply stated, IRAN CAN NOT HAVE A NUCLEAR WEAPON,” the president said in a social media post late Monday. “I said it over and over again! Everyone should immediately evacuate Tehran!”

Trump told reporters aboard Air Force One that he was looking for “a real end” to the conflict, “not a ceasefire” agreement. The president said he was “not too much in the mood to negotiate” with Iran. Trump said there was no specific threat that led to his call for people in Tehran to evacuate.

Markets mostly calm

The impact of the conflict on the oil futures market has been modest so far, with prices rising about 8% since Israel launched its air campaign against Iran’s nuclear and ballistic missile programs on Friday.

The oil market has been relatively calm in the face of the conflict because the world is well supplied with crude, said Amos Hochstein, former President Joe Biden’s senior energy advisor. OPEC+ is increasing supply to the market and U.S. production remains at record levels, Hochstein said.

Oil traders initially feared that Israel might strike Iran’s oil infrastructure in an effort to cripple the Islamic Republic’s economy. Israel has hit domestic energy facilities in Iran but has spared installations that export to the global market.

https://www.cnbc.com/2025/06/17/oil-prices-iran-israel-conflict.html

Monday June 9

China foreign reserves, aggregate yuan financing, new yuan financing, trade surplus, CPI and PPI

Japan GDP and bank lending

(10 a.m. ET) U.S. wholesale inventories for April.

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Tuesday June 10

Japan machine tool orders

U.K. employment

(6 a.m. ET) U.S. NFIB Small Business Economic Trends Survey for May.

Earnings include: GameStop Corp.; JM Smucker Co.; North West Co. Inc.

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Wednesday June 11

(8:30 a.m. ET) Canadian building permits for April. Estimate is a month-over-month rise of 1.5 per cent.

(8:30 a.m. ET) U.S. CPI for May. The Street is expecting an increase of 0.2 per cent and up 2.5 per cent year-over-year.

(2 p.m. ET) U.S. budget balance for May.

Earnings include: Andrew Peller Ltd.; Chewy Inc.; Dollarama Inc.; Oracle Corp.; Roots Corp.

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Thursday June 12

U.K. GDP, industrial and manufacturing production and trade deficit

(8:30 a.m. ET) Canada’s National Balance Sheet and Financial Flow Accounts report for Q1.

(8:30 a.m. ET) U.S. initial jobless claims for week of June 7. Estimate is 242,000, up 2,000 from the previous week.

(8:30 a.m. ET) U.S. PPI for May. Consensus is a rise of 0.3 per cent from April and up 3.2 per cent year-over-year.

(10 a.m. ET) U.S. Quarterly Services Survey for Q1.

(12 p.m. ET) U.S. flow of funds for Q1.

Earnings include: Adobe Systems Inc.; Kroger Co.

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Friday June 13

Japan industrial production

Euro zone industrial production and trade surplus

Germany CPI

(8:30 a.m. ET) Canada’s capacity utilization for Q1.

(8:30 a.m. ET) U.S. manufacturing sales and new orders for April. Estimates are month-over-month declines of 2.0 per cent and 3.0 per cent, respectively.

(8:30 a.m. ET) Canadian wholesale trade for April. Estimate is a decline of 0.9 per cent from the previous month.

(8:30 a.m. ET) Canada’s new motor vehicle sales for April. Estimate is a year-over-year jump of 10.5 per cent.

(10 a.m. ET) U.S. University of Michigan Consumer Sentiment Index for June.

U.S. job growth slowed in May amid headwinds from tariff uncertainty, while the unemployment rate held steady at 4.2 per cent, potentially giving the Federal Reserve cover to delay resuming interest rate cuts for a while.

Non-farm payrolls increased by 139,000 jobs last month after rising by a downwardly revised 147,000 in April, the Labour Department’s Bureau of Labour Statistics said in its closely watched employment report on Friday.

Economists polled by Reuters had forecast 130,000 jobs added after a previously reported 177,000 rise in April. Estimates ranged from 75,000 to 190,000 jobs. The unemployment rate remained at 4.2 per cent for the third straight month.

The economy needs to create roughly 100,000 jobs per month to keep up with growth in the working age population. That number could decline as President Donald Trump has revoked the temporary legal status of hundreds of thousands of migrants amid an immigration crackdown.

Much of the job growth this year reflects worker hoarding by businesses amid Trump’s flip-flopping on tariffs, which economists say has hampered companies’ ability to plan ahead. Opposition to Trump’s tax-cut and spending bill from hardline conservative Republicans in the U.S. Senate and billionaire Elon Musk adds another layer of uncertainty for businesses.

Employers’ reluctance to lay off workers potentially keeps the U.S. central bank on the sidelines until the end of the year. Financial markets expect the Fed will leave its benchmark overnight interest rate unchanged in the 4.25 per cent to 4.5 per cent range this month, before resuming policy easing in September.

Statistics Canada says the unemployment rate ticked up for the third consecutive month in May as the economy added 8,800 jobs.

The national jobless rate rose to 7 per cent last month, up from 6.9 per cent in April.

Statcan says that marks the highest unemployment rate since 2016 outside the pandemic years.

The wholesale and retail trade sectors were the major contributors to job gains in May, but those were offset by losses in public administration.

Manufacturing, which was hard-hit in April, shed roughly 12,000 jobs last month.

Statcan says there’s been virtually no overall employment growth since January, coming off strong job gains at the end of last year.

Canada’s trade deficit in April widened to an all-time high of a whopping $7.1 billion, data showed on Thursday, as tariffs imposed by President Donald Trump sucked out demand for Canadian goods from the United States.

Its exports to the rest of the world rose, but could not compensate for the drop in exports to the U.S., data from Statistics Canada showed.

Exports to the U.S. shrank by 15.7 per cent, a third consecutive monthly decline, Statscan said, adding that exports south of the border have fallen by over 26 per cent since the peak seen in January.

Analysts polled by Reuters had expected the trade deficit to widen to $1.5-billion for April. Statistics Canada also made a big revision to the trade deficit recorded in March to $2.3-billion from $506-million.

Canada shipped 76 per cent of its total exports to the U.S. last year and the trade between the two countries exceeded a trillion Canadian dollars for a third consecutive year in 2024. But a barrage of tariffs from Trump on Canada and its $90-billion worth of retaliatory tariffs on U.S. imports have started disrupting trade between the two.

Total exports in April plunged by 10.8 per cent to $60.4-billion, the lowest level seen in almost two years, Statscan said. This was the third consecutive monthly decline and the strongest percentage decrease in five years, it said.

While exports to the U.S. led the drop, lower crude oil prices and a stronger Canadian dollar also contributed.

The Canadian dollar was trading up 0.17 per cent to 1.3651 to the U.S. dollar, or 73.25 U.S. cents. Yields on the two-year government bonds were down 0.4 basis points to 2.613 per cent.

Exports to the rest of the world were up 2.9 per cent and in volume terms total exports registered a big decline of 9.1 per cent in April.

The biggest drop in exports came from motor vehicles and parts which lost 17.4 per cent of trade in April from March and was almost entirely attributable to exports of passenger cars and light trucks, which fell 22.9 per cent in April, Statscan said.

Imports were down 3.5 per cent in April to $67.58-billion, but were partly offset by imports of unwrought gold.

Due to the sharp decline in exports to the U.S., Canada’s merchandise trade surplus with the United States narrowed to $3.6-billion, the smallest surplus since December 2020, the statistics agency said.

The deficit with rest of the world marginally increased to $10.7-billion in April from $9-billion in March.

The Bank of Canada held its key interest rate steady at 2.75 per cent for the second consecutive time, citing ongoing trade uncertainty and an economy that continues to chug along.
 
The decision on Wednesday was in line with financial market expectations, which favoured a hold after recent strong-than-expected economic data.
 
“With uncertainty about U.S. tariffs still high, the Canadian economy softer but not sharply weaker, and some unexpected firmness in recent inflation data, governing council decided to hold the policy rate as we gain more information on U.S. trade policy and its impacts,” the central bank said in a news release.
 
The Bank of Canada held its key interest rate in April as well, pointing to the same trade uncertainty that contributed to its decision on Wednesday. The central bank is suggesting that economic data since then hasn’t fuelled urgency for rate cuts.
 
The elimination of the consumer carbon price brought down Canada’s inflation rate in April was 1.7 per cent, however underlying price pressures were firmer, with the central bank’s preferred measures of core inflation up that month. Meanwhile, the economy grew at 2.2 per cent in the first quarter, slightly higher than the Bank of Canada forecast as exports increased ahead of tariffs.

Toy maker Spin Master Corp. TOY-T says it has cut jobs across the company as it tries to weather the impact of global tariffs on its business. 

In an e-mailed statement, spokeswoman Tammy Smitham did not say how many employees were affected. 

She says the layoffs were one part of a multi-pronged plan to deal with the effect of tariffs, which also includes diversifying its supply chains and cutting costs. 

Spin Master said last month that U.S. tariffs on countries where it produces toys, especially China, have made forecasts so challenging that it withdrew its guidance for the remainder of the year. 

The company behind the Hatchimals, Gabby’s Dollhouse and Monster Jam brands has said it aims to drastically reduce its reliance on China for production over the next two years. 

In February, Spin Master said it had decided to wind down a games studio in Sweden as the cost to acquire new users weighed too heavily on revenue. 

U.S. private payrolls increased far less than expected in May, the ADP National Employment Report showed on Wednesday.

Private payrolls increased by only 37,000 jobs last month after a downwardly revised 60,000 rise in April.

Economists polled by Reuters had forecast private employment increasing 110,000 following a previously reported gain of 62,000 in April.

The ADP report, jointly developed with the Stanford Digital Economy Lab, was published ahead of the more comprehensive employment report for May due to be released on Friday by the U.S. Labour Department’s Bureau of Labor Statistics. There is no correlation between the ADP and BLS employment reports.

The labour market continues to ease amid economic uncertainty from tariffs. Government data on Tuesday showed there were 1.03 job openings for every unemployed person in April, little changed from March.

Private payrolls likely increased by 120,000 jobs in May after advancing 167,000 in April, a Reuters survey showed. Overall non-farm payrolls are estimated to have increased by 130,000 jobs after rising 177,000 in April.

The unemployment rate is forecast to be unchanged at 4.2 per cent.