USD mixed, stocks gain amid Iran tensions: Americas FX wrap

The US dollar finished the session on a mixed note, losing ground against the yen, Canadian dollar and Australian dollar while gaining on the euro, sterling, Swiss franc and New Zealand dollar. The yen outperformed, with USDJPY dropping approximately 0.80%, supported by hawkish comments from BOJ policy board member Takata and US Treasury Secretary Bessent's comment that he is aware of Japan's plans. USDCAD declined about 0.40% after the Bank of Canada left its policy rate unchanged at 2.25% but cautioned that inflation risks have grown. This shifted market expectations toward a higher probability of a rate increase later this year. The Australian dollar also advanced, rising around 0.32% versus the greenback.

The New Zealand dollar was the worst performer, sliding approximately 0.73% against the USD despite the Reserve Bank of New Zealand raising its policy rate by 25 basis points to 2.75%. The move was anticipated, but the central bank's projected rate path came in lower than what markets had priced in. In other words, the RBNZ hiked rates but did not deliver the hawkishness that traders had hoped for. Elsewhere, the USD advanced about 0.23% against sterling, 0.17% against the franc and 0.07% against the euro. On the US front, New York Fed President John Williams backed the decision to hold rates steady, saying incoming data will determine the next move. Focus now turns to Friday's US employment report, while geopolitical developments remain a significant factor.

Before Friday's nonfarm payrolls data, the ADP report released today indicated that US private employers added 38,000 jobs in August, missing the 48,000 forecast and down from a revised 46,000 in July, suggesting a subdued hiring backdrop. ADP noted it was the slowest pace of hiring since January. Education and health services led the gains with 45,000 jobs, while construction and leisure and hospitality also added positions. Manufacturing and professional services lost jobs. Annual base-pay growth stood at 3.0% for job-stayers and 4.7% for job-changers. Overall, the data points to a labor market still adding jobs but with hiring concentrated in a few sectors.

Friday's employment report is anticipated to show a modest rebound in hiring, with the unemployment rate unchanged and monthly wage growth accelerating. Based on the forecasts:

• Nonfarm payrolls: Projected to rise by 55,000, following a 23,000 decline the prior month.
• Unemployment rate: Expected to remain unchanged at 4.1%.
• Average hourly earnings: Forecast to rise 0.3% month-over-month, up from 0.1% previously.

The critical factor is the mix of soft hiring and firmer wage growth. A return to positive payroll growth would be welcomed, but a 55,000 increase would still indicate a sluggish pace. Meanwhile, faster wage growth could point to lingering inflationary pressures. Revisions to prior payroll figures will also help clarify whether the underlying labor market is improving or deteriorating.

Treasury yields edged slightly lower across the curve, with shorter-dated yields declining more than longer-dated ones. The 2-year yield fell about 1.7 basis points, while the 30-year slipped only 0.5 basis points, leading to a modest steepening of the yield curve. The 10-year yield remained above 4.75% despite the dip.

• 2-year yield: 4.377%, down 1.7 basis points.
• 5-year yield: 4.545%, down 1.3 basis points.
• 10-year yield: 4.788%, down 0.8 basis points.
• 30-year yield: 5.262%, down 0.5 basis points.

US equities ended the day higher, with buying extending beyond the biggest technology names. The Russell 2000 led with a 1.13% gain, more than double the advances in the S&P 500 and Nasdaq Composite. The Nasdaq 100 lagged, rising 0.23%, as steep declines in some technology stocks capped its advance.

• Dow industrials: 53,067.32, up 295.05 points or 0.56%.
• S&P 500: 7,666.69, up 35.21 points or 0.46%.
• Nasdaq Composite: 26,217.83, up 118.05 points or 0.45%.
• Russell 2000: 2,953.18, up 33.05 points or 1.13%.
• Nasdaq 100: 29,143.33, up 66.11 points or 0.23%.

Dell was the top performer, surging 15.27% after beating earnings estimates and raising its outlook. Nvidia climbed 3.19% and Oracle added 3.29%. Fintech names also attracted buying, with Block up 5.96%, SoFi rising 4.90% and PayPal gaining 3.65%. Strength spread to consumer and industrial names, including Best Buy (+5.40%), United Airlines (+3.98%) and Deere (+3.35%).

But it was not a broad rally. Cybersecurity shares faced pressure, led by Palo Alto Networks (-9.30%), CrowdStrike (-5.44%) and Fortinet (-4.54%). Credo Technology tumbled 20.02% after its earnings report, while Datadog fell 6.56%, Palantir lost 5.80% and Snowflake declined 4.12%.

Overall, buyers dominated, and the small-cap leadership was a positive sign of broader participation. However, the sharp divergence among technology stocks showed that investors remained selective.

US factory orders increased 0.9% in July, above the 0.6% estimate, while June's decline was revised to 0.2% from 0.3%. Durable goods orders rose 1.1%, unchanged from the preliminary reading and stronger than June's 0.5% gain. However, excluding transportation, orders rose a more modest 0.4%, slowing from 1.1% in the prior month.

The weaker area was business equipment demand. Nondefense capital goods orders excluding aircraft—a key proxy for business investment—were unchanged, revised down from a preliminary 0.2% increase, after rising 1.7% in June. Overall, the headline beat was encouraging, but the details revealed uneven strength. Manufacturing demand improved while businesses took a pause on new equipment orders.

Crude oil futures traded at $90.50, up $0.27 on the day. The session high was $92.29 while the low was $88.97. Venezuela's oil sector returned to focus today after Chevron announced plans to invest more than $7 billion over five years, aiming to roughly double production from its Venezuelan ventures to 600,000 barrels per day by 2031. The expansion includes additional acreage in the Orinoco Belt and improved investment terms. Energy Secretary Chris Wright projected that new agreements could more than double Venezuela's overall oil production over the next few years, from roughly 1.1–1.2 million barrels per day currently. Trump has touted the broader Venezuela oil agreement as a way to substantially lower US gasoline prices. However, those benefits remain a longer-term prospect: analysts say restoring the country's deteriorated infrastructure will require years of work and substantial investment. For oil traders, the announcements point toward more supply down the road, with the timing and scale of that increase still uncertain. The rise in oil prices today in the face of such positive news tells traders what the market is thinking.

Geopolitical tensions in the Middle East stayed high today as the US and Iran conducted their largest exchange of attacks since July. US forces struck Iranian military sites along the southern coast, while Iran retaliated against US bases in Bahrain, Jordan, Kuwait and Iraq. US officials reported no American casualties. Trump continued to portray the Strait of Hormuz as under US control, even suggesting renaming it 'Trump Strait,' despite continued threats to shipping. Separately, US officials said American forces struck two Iranian government tankers under a new 'tanker for tanker' policy, escalating the response to attacks on commercial vessels. For markets, the concern remains whether further fighting will disrupt energy shipments and keep inflation pressures elevated. Saudi Arabia called for a reduction in the military action and a return to diplomatic solutions.