The Morning Update

The USD remains under pressure, oil prices are falling, equity markets are rising, and US yields are increasing as risk sentiment improves. The USD continues to lose ground amid the rising prospect of a global trade war, while the Euro has rallied on news that Germany’s historic debt overhaul will support economic growth. Asian shares also outperformed after the National People’s Congress in Beijing set an economic growth target of about 5% for 2025. European equities rallied on German plans to unleash hundreds of billions of euros for defence and infrastructure spending. “This could be a real game changer for Germany and Europe,” said Murray, Zurich-based CEO of EFG Asset Management. “The positive effects should be more than a flash in the pan – there should be some genuine long-term benefits spread over a number of years. ”Elsewhere, oil prices drop for a 3^rd day on OPEC+ output increase, Gold holds steady, while Bitcoin and Silver prices rally 2%. Today's focus will be on the US ADP Employment Change, ISM Services PMI, Factory Orders, and the BoE Monetary Policy Report hearing to help drive currency markets direction.

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In the news. German parties agree on a historic debt overhaul to revamp the military and the economy. Zelenskyy says Ukraine ‘ready’ to talk peace in a bid to placate Trump. The National People’s Congress set an economic growth target of about 5% for 2025. Trump warns tariffs will cause 'a little disturbance' in defiant speech. Norway's oil fund to allocate billions to long-short equity hedge funds. Blackrock to buy Panama Canal ports after pressure from Trump. Arab states endorse alternative to Trump's postwar Gaza plan. Trudeau reportedly set to speak with Trump as high-stakes cross-border tariff standoff heads into second day.

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In currency news. Euro tops the G10 as the strongest currency today, rallying on the back of Germany's plans to unleash billions of euros for defence and infrastructure spending. CAD & MXN steady on speculation that Trump may scale back tariffs as early as today. CNY is flat, while Asian currencies on average gain by 0.1% against the USD. Trading currencies gain against a weakening USD, with MXN up 0.1%, CHF & AUD firmed 0.2%, JPY & NOK gained by 0.35%, ZAR & NZD strengthened by 0.4%, and SEK rallied by 1% against the USD.

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In commodity markets. Oil & Natural Gas prices tumbled by 1.5%. Gold up by 0.2%. Silver prices strengthened by 1.5%. Copper prices rallied by 5%. Wheat prices gained by 1.3% and Soybean prices firmed by 0.7%.

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CAD remains on the sidelines as markets weigh declining oil prices against a weakening USD while continuing to monitor the uncertainty following yesterday’s implementation of the US 25% tariffs on Canadian exports.CNN reported that Trump is expected to speak with Trudeau amid speculation that some form of middle ground might be reached as the tariff standoff enters a second day. Investors now anticipate that the Bank of Canada will further lower its benchmark rate by 25 basis points to 2.75% to support the economy. Expect the loonie to remain volatile as the U.S. trade war unfolds.

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EURCAD rallies to its highest level since Feb 2021, up over 3% month-to-date, as US tariff's keeps pressure on the loonie, while the Euro rallies on Germany's debt reforms.

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EUR rallies towards 1.0700 amid US economic concerns and German debt reforms. The euro extends its gains due to a weakening USD and improving risk sentiment across Europe fuelled by hopes for peace talks in Ukraine and debt reform in Germany. In the near term, the euro remains vulnerable to potential US trade tariffs, while the ECB is expected to adopt a less dovish stance on rates with a more gradual easing strategy. Intraday, US economic data releases will help drive the direction of the single currency today.

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GBPEUR gives back all of March gains on news that Germany agreed on a debt overall plan which is anticipated boost the German and European economy.

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GBP holds above 1.2800 ahead of US data and the BoE Governor's testimony. The pound continues to strengthen, rising over 3% in 2025 against a weakening USD as economic concerns in the US exert pressure on the greenback. BoE Governor Bailey will testify before the Treasury Select Committee today. If he adopts a dovish tone and hints at potential rate cuts, we could see the pound retreat toward 1.2600. Today also features a flurry of key US data releases; if the data misses’ expectations, this could bolster the pound.

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