The Morning Update

Rising oil prices, a strengthening US dollar, and declining equity and bond yields indicate market uncertainty, with investors likely seeking safety amidst concerns over global economic conditions, geopolitical tensions, or potential changes in monetary policy. USD bears were halted as risk sentiment took a hit after the Trump administration directed the Committee on Foreign Investment in the U.S. to restrict Chinese investments in key sectors like tech and energy. U.S. also urged Mexico to impose levies on Chinese imports, proposed fees on Chinese-built ships entering U.S. ports, and called for a review of a 1984 tax deal with China to address double taxation. The 25% tariff on Mexico and Canada starts on March 4, and tariffs on all steel and aluminum imports begin on March 12. These tariffs could boost the USD unless delayed.

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News Headlines. The U.S. sided with Russia, Belarus, North Korea and Syria twice at the UN on the third anniversary of Russia's invasion of Ukraine, reflecting a shift in the Trump administration's stance. Macron suggested a Ukraine-Russia truce could happen soon, stressing it shouldn't be a surrender and should include security guarantees, while Trump seeks a quick ceasefire after White House talks. Zelensky willing to quit presidency if it means peace in Ukraine and NATO membership. Japan and the Philippines agreed to a "strategic dialogue" to enhance defense tech and equipment cooperation. Japanese Defense Minister Gen Nakatani and Filipino counterpart Gilberto Teodoro signed a new deal amid concerns over China's actions and other countries' attempts to alter the international order.

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In currency markets. The JPY remains under pressure due to a decline in JGB yields, but bets on BoJ rate hikes could limit losses. Expectations of Fed rate cuts weigh on the USD. Both the AUD and NZD are losing ground against the USD, down 0.08% and 0.23% respectively. In the emerging market currencies, the MXN and ZAR weakened against the greenback.

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In commodity markets. Oil prices have risen due to U.S. sanctions on Iran, targeting entities involved in its oil transport, aiming to reduce exports to zero and raising concerns about global supply. Gold hit a new all-time high at $2,956 but dropped after the Trump administration announced tougher restrictions on China's tech and semiconductor developments. Traders are bullish on rising silver prices amid market uncertainties, while the threat of copper import tariffs adds volatility, with potential impacts on global supply and demand.

Current level USD Index                106.64          Up 0.05%

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USD/CAD faces fresh selling pressure on Tuesday, driven by recovering oil prices supporting the Loonie, a weaker USD, and diverging Fed-BoC policy expectations.

Current level USD/CAD                   1.4260            Down 0.13%

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EUR/CAD holding gains from the past four sessions. U.S. tariff threats on Canada have impacted market sentiment, supporting EUR/CAD stability.

Current level EUR/CAD                   1.4935            Up 0.03%

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The EUR/USD is trading below 1.0500, with ECB data showing slower wage growth in Q4. Analysts see potential for a breakout above 1.0500, signaling further.

Current level EUR/USD                   1.0474            Up 0.13%

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GBP/EUR slipped against after Germany's election signaled political stability, but the Euro's gains were limited by a weaker-than-expected Ifo business climate index.

Current level GBP/EUR       1.2057 (0.8294)         Down 0.14%

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GBP/USD hit two-month highs above 1.2650 against the USD but retreated due to dovish comments from the Bank of England.

Current level GBP/USD                   1.2631          Up 0.11%

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