The Morning Update

As markets await the release of U.S. retail sales data, the USD trades lower, oil prices edge higher, while equities and bond yields decline. While tariffs have dominated recent market discussions, key economic data is also on the horizon. The U.S. will release March retail sales figures today, with expectations of a 1.3% increase. Meanwhile, the Bank of Canada is set to announce its interest rate decision, with most analysts anticipating no change.

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News Headlines. The White House has removed Reuters and Bloomberg from the press pool covering President Trump, tightening control over media access. Trump threatened to revoke Harvard's tax-exempt status after it rejected demands to overhaul academic programs, following tensions over pro-Palestinian protests on campuses after the 2023 Hamas-led attack on Israel. Hamas rejected Israel’s six-week ceasefire offer, citing no commitment to end the war or withdraw troops, as fighting in Gaza continues. NATO's support for Ukraine remains strong, with over $22 billion in security assistance pledged in the first quarter of the year, NATO's secretary-general said during a visit to Odesa with President Zelenskyy.

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In currency markets. China has named a new trade envoy amid rising tensions with the U.S. over tariffs. Beijing criticized Washington’s “trade bullying” as damaging to the global economy. As exporters rushed to beat tariffs, China reported strong Q1 growth of 5.4% but warned Trump’s tariffs pose pressure. Meanwhile, Xi Jinping is in Malaysia as part of his Southeast Asia tour to bolster trade ties. Earlier, China and Vietnam issued a joint statement supporting a WTO-centered multilateral trade system following Xi’s two-day visit. Chinese sellers are using social media platform to offload unsold U.S.-bound goods at discount prices, blaming Trump’s 145% tariffs for lost exports. Hong Kong's post office will halt small parcel shipments to the U.S. after Washington imposed a 120% tariff on items under $800. As the USD weakens. the JPY continues to strengthen, up 0.29% and approaching a multi-month high. Other Asian currencies are also gaining, with the CNY rising 0.36% and the THB climbing 1.14%. The AUD and NZD follow suit, gaining 0.45% and 0.25%, respectively. In the emerging markets, the ZAR rallied 0.51% and the MXN 0.32%.

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In commodity markets. Oil prices are up 1% this morning but remain down 8.1% for the month, as concerns over a potential global economic slowdown due to tariffs continue to weigh on the market. Gold prices continue to trade near $3,300 (up 1.6%) after hitting a record high. Agricultural commodities are mixed with Soybean down 0.4%, wheat up 0.26% and lumber down 0.72%.

Current level USD Index                99.568         Down 0.65%

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USD/CAD jumped after Canada’s inflation came in below expectations, raising doubts about the BoC’s policy stance. While the central bank is widely expected to hold rates steady, markets are now focused on Governor Macklem’s tone, especially amid rising concerns over the economic impact of Trump’s tariffs.

Current level USD/CAD                   1.3907            Down 0.34%

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EUR/CAD remains resilient, trading near the upper boundary of its recent range.

Current level EUR/CAD                   1.5810            Up 0.42%

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EUR/USD rebounds as the US Dollar resumes its decline after a brief recovery. Market participants expect further USD weakness and potential upside for EUR/USD amid uncertainty surrounding US tariff policies.

Current level EUR/USD                   1.1364            Up 0.72%

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GBP/EUR cross weakens to near 0.8565 after the UK CPI report showed softer-than-expected inflation data. The GBP falls as CPI rose 2.6%, below the 2.7% forecast. The EUR gains momentum, with market focus now shifting to the Eurozone's HICP data later today.

Current level GBP/EUR       1.1673 (0.8567)         Down 0.42%

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GBP/USD rises as the USD weakens, driven by concerns over a potential US recession due to Trump’s trade policies. Despite a tariff pause, fears of economic slowdown persist.

Current level GBP/USD                   1.3266          Up 0.27%

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