The Morning Update

The US$ eases, oil prices steady, equity markets are down, while US yields are mixed ahead the latest corporate earnings. Currency markets remain range bound, equity markets weaken as investors await the latest corporate earnings and a slew of economic data releases in the latter part of the week that may help illuminate the path for interest rates. This is a busy week for earnings which will see Cocal Cola, First Republic Bank, First Citizens Bank and Tech giants Microsoft, Meta Platforms & Amazon report. No Fed speak this week ahead of the FOMC on May 3-4th. Today sees a light economic data with just the Chicago Fed National Activity Index, this week focus will US Durable Good Wednesday, US GDP on Thursday, BOJ Interest Rate Decision, German GDP EU GDP on Friday.

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In other news. Countries rush to evacuate nationals from Sudan as violence escalates. Australia overhauls defense strategy to respond to China's build-up. ECB to keep raising interest rates unless wage growth slows, says official. Chinese ambassador sparks European outrage over suggestions former Soviet states don't exist, China followed up by saying it "respects" sovereignty of ex-Soviet states. Canada's largest federal public service union call on the PM to speed up contract talks. US House to vote on Republican debt limit bill this week. Ukraine war spurs record global spending on military, Stockholm think tank says. US oil refiners to post strong Q1 earnings, but demand out look dims.

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In the currency markets. The US$ index eases giving up early gains as markets shift focus to US corporate earnings. AUD looks vulnerable ahead of its inflation report on Wednesday. CNY holds near 1-month lows as global growth concerns impacts the worlds largest manufacturer. CNY slips 0.1%, while Asian currencies are flat on average vs US$. Trading currencies are mixed with MXN weakens 0.25%, AUD, NOK & JPY down 0.15%, SEK & ZAR slip 0.1%, while NZD is up 0.15%, CHF strengthens 0.3% vs US$.

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Oil prices are steady as concern over rising interest rates & the global economy were offset by the prospect of tightening supplies. C$ opens up flat sitting at its monthly lows vs US$, but the loonie looks vulnerable to a break of 1.3550 despite a subdued US$. Bearish oil prices, a BoC on pause and the potential for further safe-haven support for the US$ is expected to keep pressure on the C$ heading into FOMC May 4th. Today sees CAD New Housing Price Index data out, but its expected to have a limited impact on the loonie direction today. Support resets to 1.3480, while Resistance rises to 1.350.

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EURCAD continues to advance to retest 1-year highs as hawkish ECB comments continue trump the BoC strategy to keep rates on hold. Support rises to 1.4815 while resistance rises to 1.4940.

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Euro retests 1.1000 on a stalled US$ and amid mixed German IFO survey. Euro looked beyond mixed german ZEW survey, gaining ground as the US$ weakens in early trading. ECB Wunsch's told the FT that the central bank will continue to hike rates until the bank sees a slowdown in wage growth. "I would not be surprised if we go to 4% at some point" Wunsch added. The hawkish ECB comments has been the primary supporter for the Euro today and has underpinned its ability to breach 1.1000. Today focus will be on US earnings and the Chicago Fed National Activity Index to help provide intraday direction. Support rises to 1.0950, while resistance resets to 1.1050.

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GBPEUR slips in early trading as investors bias continues to support the Euro on the back of hawkish ECB comments. Support lowers to 1.1250 while resistance resets to 1.1330.

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GBP stalls at 1.2450 as the pound attempted to rally on the back of a weaker US$. The pound struggles to strengthen despite a weaker US$ as risk-averse markets contains investor enthusiasm to return to the pound. PM Sunak launches a charm offensive on business leaders, where he will pledge to work with companies in the hope of reviving the economy and in an effort to turn around his parties appeal before next years expected election. Expect markets to hold relatively steady ahead of Thursday's key US GDP report and the lack of Fed speak ahead of May 4th US interest rate decision. Support holds at 1.2350 and Resistance is steady at 1.2470.

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