The Morning Update

The USD is flat, oil prices are weakened, equity markets are up, and US yields are rising, heading into significant tech earnings. Currency markets edged higher, while equity markets rose as investor focus shifted from geopolitical tensions to focus on a slew of corporate earnings in the coming days, including some of the major tech companies. This week, the focus will be on IBM, Boeing, Meta, Microsoft, Alphabet, Airbus, and Caterpillar earnings. Elsewhere, oil and gold prices slipped, bitcoin strengthened +2%, and yields in the US, Germany & UK all gained in early trading. This week's focus is Monday's eurozone PMI, CAD housing price index, EU consumer confidence, and ECB's President Lagarde's speech. Tuesday, French, German, UK, EU & US PMI releases. Wednesday, AUD CPI, CAD retail sales, US durable goods orders, BoC summary of deliberations. Thursday, German GfK consumer confidence survey, EU Economic Bulletin, US Core PCE, US GDP, US initial jobless claims, Friday, Japane CPI, BoJ Interest Rate Decision, US Core PCE, Michigan Consumer Sentiment Index & UoM 5-year Consumer Inflation Expectation. Intraday sees a light on the US economic calendar, so we anticipate markets will remain within current trading ranges ahead of Tuesday's key data releases.

‍

In other news. Tesla slides 3% in premarket, Li Auto sinks 8% as EV makers slash prices amid fierce competition. Greece & Spain are under pressure to provide Ukraine with air defense systems. Israel's head of military intelligence resigns over the October 7th attack. Biden will unveil a $7 billion rooftop solar Earth Day message. The US & Philippines to take military drills into contested South China Sea. The US is to impose sanctions on the Israeli military unit over alleged human rights abuse. Heatwave-linked deaths in Europe reported up 30% over the past 20 years. The average Toronto home price could hit $2 million in the next decade, analysis suggests.

‍

In currency markets. The USD holds steady in early trading after a volatile week of trading, while JPY & KRW remain in the spotlight. CNY remains under pressure, holding near five-month lows. CNY & Asian currencies slip 0.1% on average against the USD. Trading currencies are mixed with JPY & CHF down 0.1%, NOK is flat, IDR, SEK & ZAR firmed 0.1%, AUD, MXN & NZD gained by 0.3% vs. USD.

‍

In commodity markets. Gold & natural gas prices slipped by 0.5%, gold weakened by 1.6%, silver prices tumbled by 3.3%, copper & wheat prices firmed by 0.6%, and soybean prices dropped by 0.4%.

‍

CAD edges higher despite weakening commodity prices in early trading as risk sentiment steadies and the USD is sidelined as investors await US PMI & PCE data later in the week. Domestically, several CAD economic releases today include the Industrial Product Price, the New Housing Price Index, and the Raw Material Price Index. Still, unless they print significantly outside the expected range, we don't expect any impact on the loonie. A break of 1.3700 could see CAD make further gains towards 1.3675 next.

‍

EURCAD weakens in early trading as focus shifts to ECB's Lagarde's speech, which is expected to take on a more hawkish tone.

‍

EUR is continuing to tread water within a 1.0620/1.0670 range, with the absence of crucial economic data today. The euro remains within a tight trading range due to the lack of any critical EU or US economic data, and the Fed speakers will be absent from the market this week ahead of the FOMC next week. Domestically, the focus will be on the Eurozone Consumer Confidence report, followed by the ECB President Lagarde's comments. Markets are increasingly expecting Lagarde to take a more dovish tone, with markets expecting the ECB to cut interest rates in June.

‍

GBPEUR tumbles through 1.1600, testing a fresh April and four-month low vs. Euro after last week's data showed that UK economic growth has stagnated.

‍

GBP continues under selling pressure, with the pound breaching 1.2350 in early trading. The pound hit a fresh five-month low vs. the USD with growing expectations that the BoE is more likely to cut its domestic interest rates earlier than the Fed. BoE Deputy Governor Ramsden said on Friday that risks to persistence in domestic inflation pressures were receding. He went on to say that some of the fundamentals of US growth dynamics differed from the UK and noted that they will do what makes sense regarding their mandate. With the lack of any crucial US or UK data today, we expect the pound to hold above 1.2300.

‍