The Morning Update

We begin the week where we left off on Friday, with the U.S. dollar strengthening, while oil prices, equities, and bond yields are all experiencing declines. Market volatility remains elevated as investors continue to digest the impact of the U.S. tariffs. President Trump defended the sweeping measures, stating, "Sometimes you have to take medicine to fix something," while adding that European and Asian countries are "dying to make deals." Asian equities reacted sharply to the President’s comments, with the Nikkei plunging 7.8% and the Hang Seng index dropping over 12%.

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News Headlines. Israel has significantly expanded its control in the Gaza Strip since resuming its war against Hamas, now holding over 50% of the territory. The military has created a buffer zone along the Gaza border, demolishing homes, farmland, and infrastructure, making large areas uninhabitable. This zone has doubled in size in recent weeks.

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In currency markets. Asian stocks from Shanghai to Tokyo and Sydney to Hong Kong plunged on Monday to levels not seen in decades, as global markets continue to reel from US President Donald Trump's tariffs. China accused the U.S. of unilateralism, protectionism, and economic bullying through its tariffs. The JPY strengthened as concerns over U.S. tariffs and geopolitical tensions boosted demand for safe-haven assets. Japan's rising inflation also fueled expectations of rate hikes by the Bank of Japan. Meanwhile, the USD weakened amid fears of an economic slowdown and potential Fed rate cuts. Other currencies are generally lower against the USD with the CNY down 0.44%, THB down 0.58%, MYR down 0.97%. The AUD and NZD did not do better losing 0.17% and 0.35% respectively. In the emerging markets, the ZAR lost 1.34% and the MXN 1.1%.

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In commodity markets. Energy prices are down this morning, with oil falling 3% and natural gas dropping 2.4%. Metals are mixed, as gold slips 0.2% while silver rises 2.8%. Agricultural commodities are also varied, with soybean down 0.15%, wheat unchanged, and lumber falling 2%

Current level USD Index                102.867         Up 0.34%

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USD/CAD remains under pressure on the back of weak oil prices and BoC interest rate decision on April 16th.  As we get closer to election day, expect the market to react to poll numbers.

Current level USD/CAD                   1.4248            Up 0.24%

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EUR/CAD remains extremely volatile and markets digest market movements.

Current level EUR/CAD                   1.5630            Up 0.31%

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EUR/USD bounced to 1.1000 after dipping to 1.0880, as the US Dollar weakened due to Trump’s unexpected tariffs. Despite market losses, Trump expects the tariffs to benefit the US, though concerns about a recession weigh on the USD.

Current level EUR/USD                   1.0970            Up 0.19%

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GBP/EUR President Trump's tariff move sparked major volatility, pushing the GBP/EUR exchange rate to 17-month lows. The Pound was further pressured by a slump in equity markets, with the FTSE 100 at 3-month lows and the S&P 500 down over 10% in two days. Political and economic responses, especially from the EU and UK, will be crucial in the weeks ahead.

Current level GBP/EUR       1.1713 (0.8520)         Down 0.41%

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GBP/USD drops as the US Dollar strengthens. Fed Chair Powell warned Trump’s tariffs could boost inflation and slow growth, with recession probabilities rising. Investors are focused on Thursday’s US CPI data, but its impact on the USD is expected to be limited unless inflation expectations shift significantly.

Current level GBP/USD                   1.2938          Down 0.22%

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