US Treasury Announces 'Economic D-Day' Sanctions on Iran Amid Market Cautiousness

Financial markets are relatively quiet to start the week as investors hold back from taking large positions ahead of key events. The economic calendar is light on Monday, but US Treasury Secretary Scott Bessent will hold a press conference at 18:00 GMT to unveil 'economic D-Day' sanctions on Iran.

The US aims to sever every economic lifeline that sustains Iran, according to Bessent. This move comes as investors await the release of high-impact macroeconomic data later in the week, including the second estimate of the quarterly Gross Domestic Product (GDP) growth data and the Personal Consumption Expenditures (PCE) Price Index figures for July.

The US Dollar (USD) Index is benefiting from the cautious market stance, edging higher to the 99.00 region after closing last week deep in negative territory. Analysts at ING highlight that Wednesday's release of US core PCE inflation for July and Friday afternoon's keynote speech from Federal Reserve Chair Kevin Warsh at the Jackson Hole symposium will be closely watched.

RBC argues that the latest Section 338 US tariffs are unlikely to materially alter the monetary policy outlook, despite some disruption to specific export sectors. The bank expects targeted government measures rather than a shift in Bank of Canada (BoC) policy to provide relief.