The Morning Update

The USD remains strong while oil prices and equity trade lower and Treasury yield inches higher. The USD remains near August highs as market participants are now focusing on a gradual reduction in US interest rates. Trump accuses the UK’S Labour Party of election interference as some of their volunteer travelled to the US to help Harris’ campaign. British political volunteers have long travelled to the U.S. ahead of elections, with activists of the centre-left Labour Party typically supporting the Democrats, its sister party, and Conservatives backing the Republicans.

In other news. The Israeli military say they killed the cleric tipped to succeed the late Hezbollah leader, Hassan Nasrallah, in an air strike nearly three weeks ago. Blinken pushes for a halt to fighting between Israel and Hamas and Hezbollah as Israeli launched a heavy airstrike on a large Lebanese port city. South Korea lawmakers believe that North Korea has sent 1,500 soldiers to Ukraine to assist the Russian in their war.

In currency markets. The CNY is trading near a 2-month low as market digest the possibility of an increase tariffs on Chinese goods in a Trump win. The JPY continue to weaken (-1.0%) on the back of the strong dollar and higher treasury yield. AUD and NZD are off 0.4% and 0.1% respectively as it faces a strong USD. The THB and MYR are down over 0.5% while the ZAR and MXN lost 0.40%.

In commodity markets. Oil prices drop over 1% after industry data showed a higher-than-expected increase in crude inventories. Gold remains strong and hit a new high on the back of geo-political uncertainties. Silver took a breather today after reaching a 12-year high yesterday. At the Russian summit, Putin proposed a BRICS grain exchange that will defend national markets from external interference. Soybeans rise (0.1%) for third session on strong demand; wheat falls 0.7% as showers in parts of southern Russia and the U.S. plains were expected to help planting and ease concerns over dryness.

Current level USD Index                           104.347             Up 0.26%

The USD/CAD remains stable as we await the BoC interest rate decision where a 50-bps cut after headline inflation is now below the targeted 2% level. As always, the policy statement and press conference will be scrutinized to see if it offers clues as to the BoC’s next move.

Current level USDCAD                              1.3823                 Up 0.05%

The EURCAD faced some profit taking and is trading near it’s October lows as we await the BoC’s interest rate decision later today.

Current level EURCAD                               1.4904                 Down 0.09%

The EUR struggles continue on the back of a strong USD as well as Lagarde’s comment saying that she’s hopeful that inflation will fall at a faster-than-expected pace.

Current level EURUSD                               1.0782                 Down 0.13%

The GBPEUR remains strong against as ECB policymakers discusses the possibility of interest rates falling below the neutral level.

Current level GBPEUR               1.2037 (.8305)                             Up 0.12%    

The GBP trades lower as market awaits BoE Bailey’s speech later today. The main risk would be that Bailey would make dovish statement after the weaker than expected CPI.

Current level GBPUSD                               1.2983                 Down 0.01%

‍