The Morning Update

The USD holds steady, oil prices ease, equity markets are mixed, and US yields rise amid reports on geopolitics, tariffs, and inflation. Currency markets are steady ahead of a key US inflation report on Tuesday, which could help determine if the Fed lowers interest rates at its September meeting. Equity markets are mixed as optimism fades that the summit between Presidents Trump and Putin could bring the war in Ukraine closer to a resolution. Markets will also be focusing on the US-China tariff truce, with the deadline looming on Tuesday. The US hasn't offered any indication of whether Trump will seek an extension, which has increased concerns that tensions between the world's two largest economies could rise again. Elsewhere, oil prices ease, while Bitcoin approached an all-time high, rallying over 2% to $121,345, and gold prices tumble 2%. In focus this week, Monday sees a light economic docket. Tuesday, AUD interest rate decision, UK employment report, US CPI report, and Monthly budget report. Wednesday, German Inflation report. Thursday, UK GDP report, EU GDP report, US PPI, & Japanese GDP report. Friday, US-Russia meeting, NY Empire State Manufacturing Index, and Michigan Consumer Sentiment Index, will provide guidance to currency markets this week.

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In the news. Europe urges Trump to use sanctions pressure ahead of Putin summit. Nvidia and AMD to pay 15% of China chip sales revenue to the US government. Trump to meet Putin in Alaska as he signals Ukraine may need to cede land. US stock futures tick higher ahead of key data expected this week. In India, Trump's tariffs spark calls to boycott American goods. Australia to recognize Palestinian state at the UN in September. Lithium market soars as CATL shuts one of the world's biggest mines. Bitcoin nears record as Treasury investors boost crypto market. China South City Holdings Ltd has been ordered to liquidate by the Hong Kong court. Air Canada flight attendants 'mobilizing' at major airports as strike threat grows.

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In currency markets. The USD holds steady with the absence of any high-tier economic data releases today, and focus shifts to the US inflation report on Tuesday. Markets will be monitoring updates on the US-China tariff truce, which could see triple-digit tariffs imposed if the truce isn't extended. CNY and Asian currencies are flat on average against the USD. Trading currencies are mixed, with CHF & CZK weakening 0.4%, PLN, SEK & PLN falling to 0.25%, NZD & ZAR down 0.1%, JPY, KWD, NOK & DKK are flat, and AUD gaining 0.2% against the USD.

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In commodity markets. oil prices down 0.1%. Natural Gas & Gold prices tumbled by 2.25%. Silver prices weakened by 1.4%. Copper prices fell 0.3%. Wheat prices gained by 0.7% and Soybean prices rallied 2.2%.

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CAD weakens in early trading as the loonie comes under pressure following Friday's Canada weaker-than-expected jobs report, as investors increase expectations that the Bank of Canada could cut interest rates as early as September. Friday saw the Canadian economy shed 40,800 jobs, while analysts had expected a 13,500-job gain, and this was compared with a net addition of 83,000 jobs in June. With the absence of key economic releases today, we anticipate the loonie will remain within its current levels, as investors are sidelined ahead of the US inflation report on Tuesday.

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EURCAD edges higher amid a softer CAD following Friday's Jobs report.

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EUR straddles 1.1650 with investors sidelined ahead of Tuesday's inflation report and the US-China tariff deadline. The euro is sidelined, holding steady at 1.1650 after recovering from last week's weakness, after a flurry of comments from Fed policymakers suggesting the Fed is open to easing. Markets will be looking to Tuesday's US CPI report, which is expected to show inflation levels easing month-over-month by 0.2%, down from 0.3% in June. Intraday, expect the euro to continue to trade in a tight range today.

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GBPEUR is flat with markets sidelined due to the lack of market-moving data being released today.

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GBP holds on to last week's gains following the BoE interest rate decision. The pound has had a volatile start to August, tumbling to 1.3140, its lowest level since mid-April, before rallying back to 1.3460 after investor confidence returned following the BoE's rate cut last week. With the increasing prospect of a Fed rate cut in September, we anticipate the pound should find support ahead of Tuesday's key US inflation report.