The Morning Update

Monday April 21st, 2025

We start the week with the USD, oil, and equity markets under pressure, while bond yields edge slightly higher. Asian stocks and U.S. futures fell Monday as tariff worries and Trump's criticism of the Fed rattled investors, sending the dollar down and gold to a record high. Trump’s recent attack on Fed Chair Powell, including talk of firing him, raised concerns over central bank independence. With equity markets under pressure, we would typically expect capital to flow into high-quality assets like the USD and U.S. Treasuries. However, today tells a different story: while equities are down 1%, the USD is off 0.67%, and bond yields have risen slightly by 0.02%. It seems that some of the capital is instead flowing into gold, which is up 2.1%.

‍

News Headlines. The Israeli military admitted to "professional failures" in the March 23 killing of 15 rescue workers in Gaza and said a commander would be dismissed. The victims were shot in three incidents and later found in a shallow grave. VP Vance began a four-day visit to India on Monday, meeting PM Modi as New Delhi seeks to avoid steep U.S. tariffs and strengthen ties with the Trump administration. Putin announced a 30-hour Easter truce with Ukraine, but President Zelensky said Russian strikes continued. Putin warned troops would respond to any violations.

‍

In currency markets. China on Monday accused the U.S. of tariff abuse and warned other countries against any economic deals made at its expense, vowing firm and reciprocal counter measures. A second Boeing 737 MAX 8 bound for a Chinese airline returned to the U.S. on Monday, likely caught in the ongoing U.S.-China trade spat. Flight data showed it landed in Guam after departing Boeing's Zhoushan facility near Shanghai. The USD weakened across the board in Asia, with notable gains from JPY (+0.87%), CNY (+0.18%), THB (+0.92%), and MYR (+1.0%). The AUD and NZD also advanced, rising 0.66% and 1.15% respectively. In emerging markets, the ZAR climbed 0.61%, while the MXN gained 0.34%.

‍

In commodity markets. Oil prices fell 2.8% amid progress in U.S.-Iran talks and ongoing tariff concerns. Gold continues to make new highs as it trades near $3,400 having gained 2.1% overnight (+12.8% last month).  Agricultural commodities are showing a mixed performance, with soybeans rising 0.44%, wheat slipping 0.04%, and lumber gaining 0.26%.

Current level USD Index                98.133         Down 0.66%

‍

USD/CAD fell to its lowest in six months, as the U.S. dollar weakened amid political pressure on the Fed. Investor confidence shaken by Trump's push to remove Fed Chair Powell and ongoing tariff uncertainty. This moves lower as oil prices drop 3% drop.

Current level USD/CAD                   1.3795            Down 0.35%

‍

EUR/CAD moved significantly higher at the start of the week reaching levels not seen since August 2021.

Current level EUR/CAD                   1.5928           Up 1.0%

‍

EUR/USD rose to its highest in three-and-a-half years, as the USD weakened amid growing doubts about its safe-haven status.

Current level EUR/USD                   1.1539            Up 1.28%

‍

GBP/EUR extends losses as the Euro strengthens against the USD amid recession concerns.

Current level GBP/EUR       1.1609 (0.8617)         Down 0.53%

‍

GBP/USD rose in early Asian trade, supported by broad USD weakness amid growing fears that President Trump’s policies could trigger a recession. PM Keir Starmer and President Trump held their first call since U.S. tariffs on UK goods, with Starmer stressing the value of free trade and protecting national interests.

Current level GBP/USD                   1.3393          Up 0.71%

‍