The Morning Update

As we start the day, the USD trades higher, equities are mixed, treasury yield are flat while oil trades lower. After a few consecutive down days, the USD found a base as market participant took profit ahead of Thursday Personal Consumption Expenditure and GDP. On the political front, the market is keeping an eye on the upcoming Trump/Biden debate.

In other news. Netanyahu set to move troops on the Lebanese border to confront Hezbollah as "intensephase" of fighting in Rafah in southern Gaza is nearly over. After months of delays, Western artillery supplies are reaching the Ukraine front lines.

In currency news. The JPY attempted to break the 160 level with little success as fears of a BoJ intervention loomed. Comments from Japanese officials that the authorities would respond to excessive currency volatility limits the JPY from weakening. The CNY eased to a fresh seven-month low against the dollar looked set for its sixth straight monthly decline. The USD opens higher against the CNY 0.5% and THB 0.05%, while retracing against the JPY 0.15% and MYR 0.13%. The AUD gained 0.05% against the USD while the NZD gave up 0.05%. The greenback rallied against both the ZAR 0.43% and MXN 0.70%.

In commodity markets. Oil is taking a breather (down 0.44%) after the recent move higher as market digest the geopolitical news and now awaits US inflation figures. Gold and silver are off 0.4% and 0.5% respectively this morning as market awaits more economic data. Copper futures are hedging 0.30% higher in early trading. Wheat bounced from two-month low (up 0.40%) as traders focus on India’s import plans. Soybeans are flat as we start the trading day.

Current level USD Index               105.495           Up 0.02%

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The USD/CAD continues its downtrend ahead of the BoC’s inflation data set to be released later today.

Current level USD/CAD               1.3658            Down 0.03%

The EUR/CAD trades in a narrow range ahead of the Canadian CPI, which is set to be released later today. Uncertainty about France’s political situation is keeping the currency pair from straying above the 1.4700 area.

Current levelEUR/CAD                1.4651           Down 0.02%

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EUR/USD is benefitting from a growing optimism that the Fed will cut interest rates twice in 2024. The market awaits PCE and GDP data later this week to confirm these expectations.

Current level EUR/USD                1.0727           Down 0.05%

The GBP/EUR retraced as BoE dovish comments increased the chance of a rate cut in August. However, the uncertainties surrounding the French elections is limiting any move lower.

Current level GBP/EUR     1.1827(0.8451)        Up 0.12%

The GBP/USD rises on expectations that the Fed will cut interest twice in 2024. A BoE rate cut in August is widely anticipated by market participants.The focus will be on US CPE set to be released later this week.

Current level GBP/USD                1.2691           Up  0.09%

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