The Morning Update

Monday May 6^th , 2024

The USD, equity markets and oil prices are trading higher to start the week while treasury yields are hedging lower. The US economy shows mixed signs of progression with robust demand and a tight labor market exhibiting slow yet significant wage growth, contributing to inflation. Fed Powell remains cautious about inflation's trajectory, emphasizing that restrictive monetary policy has curtailed economic overheating. Friday’s weak labor market numbers increased the odds of a September rate cut.

In other news.  Israel orders Gazans to evacuate part of Rafah ahead of a limited operation – Hamas warns of consequences. UN accuses Israel of denying aid access amid 'full-blown famine' in north Gaza. Macron sets Ukraine as top priority as China’s Xi Jinping pays a state visit to France. The Kremlin brands comments on Ukraine by France’s Macron of not excluding sending troops to Ukraine and Britain’s Cameron allowing use of long-range weapon to strike targets inside Russia as ‘dangerous. In retaliation, Russia is set to practice tactical nuclear weapon scenario in drills to deter West.

In currency news. China's yuan surges to 6-week high, after the Labour Day Holiday. The AUD trades higher as investors believe that the RBA will take a more hawkish stance at this week’s policy meeting. The NZD is expected to keep rates stable at their May 22^nd meeting though a cut is fully priced at the October meeting. The USD is up against the JPY (0.46%), while loosing ground against the AUD (0.27%) and NZD (0.13%). The USD is flat against the MYR and up 0.11% against the INR. The trading currencies are trading higher against the USD with the ZAR up 0.38% and the MXN 0.22%.

In commodity markets. Oil prices are trading higher as market digests Saudi Arabia’s price increase and Gaza’s rise in tensions. Gold prices hedges higher after Friday’s tepid job data report and increase tension in the Israel/Hamas war.  Both Silver and Copper prices are up this morning, with silver rallying 2.4% and copper 1.19%. Soybean is off at the start of the week after climbing to a 6-week high while wheat prices slid 1.7% paring some of its recent gains.

Current level USDIndex               105.072            Up 0.04%

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The USD/CAD remains on the defensive as oil prices moves higher. The release of the Canadian PMI ands employment data should give some clarity as to the direction of the Canadian economy. Last Friday’s US employment data raised hope for a Fed rate cut.

Current level USD/CAD               1.3675             Down0.08%

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The EUR/CAD is trading within a narrow range to start the week as it tries to break above the early March highs of 1.4775.

Current level EUR/CAD                1.4723            Down0.05%

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EUR/USD remains steady despite last Friday’s weak US employment data and increased expectation of a Fed rate cut. ECB’S Stournaras sees 3 interest rates cut this year.

Current level EUR/USD                1.0766            Up0.07%

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GBP/EUR is stuck in a right range as the market focuses on the BoE monetary policyannouncement. The Euro is struggling to gather some strength as the expectationis that the ECB will cut rates sooner than the BoE.

Currentlevel GBP/EUR     1.1677 (0.8560)        Up 0.17%

‍Quiet start for the GBP/USD as the market digests last Friday’s weak US employment figures and market s witch its focus on the upcoming BoE policy decision.

Currentlevel GBP/USD                1.2574            Up0.24%

Otherccy levels vs C$. GBPCAD 1.7192  AUDCAD .9061  CADCHF.6623 CADJPY 113.41  CADTHB 26.87  CADCNY 5.2695  CADNOK 7.9288 CADSEK 7.9091 CADDKK 5.0623  CADZAR 13.4701

Otherccy levels vs USD. JPY 153.75  CHF.9054  AUD.6626 NZD .6019  CNY7.2068  MXN 16.9160  INR 83.5010  PLN 4.0137 CZK 23.216 ZAR 18.4296  ILS 3.7453  AED 3.6725  KWD 0.30722

OtherMajor X levels. EURCHF.97.51  EURJPY 165.60  EURSEK 11.6451 EURNOK 11.6705 GBPCHF 1.1387  EURAUD 1.6253  GBPAUD 1.8973 AUDCHF.6000  AUDJPY 101.88  CHFJPY 169.90

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