USD/CAD, XAU/USD React as Israel-Hezbollah Ceasefire Shifts Risk Sentiment

Gold (XAU/USD) dropped sharply by $49 to $3,160 as a ceasefire agreement between Israel and Hezbollah reduced safe-haven demand, while WTI crude oil rose 94 cents to $77.54 on supply uncertainty despite the geopolitical de-escalation. USD/CAD saw modest activity after Canada's April retail sales came in at +0.5%, slightly below the +0.6% consensus, suggesting softer consumer spending that could weigh on the Canadian dollar. US markets were closed for the session, limiting liquidity and amplifying moves in futures, with S&P 500 futures trading lower. The fragile nature of the ceasefire — underscored by a deadly drone strike in Southern Lebanon shortly after the agreement — introduces residual geopolitical risk that could reignite safe-haven flows. Meanwhile, reports of Iran planning future diplomatic meetings with the US add another layer of geopolitical complexity. GBP traders should monitor developments around UK PM Starmer's leadership, as reports of cabinet pressure for a departure timeline could inject political risk into sterling. Near-term, traders should watch for follow-through in gold and oil as ceasefire durability is tested.