The Morning Update

The USD slips, oil prices firm, equity markets are up, and US yields are mixed as risk sentiment improves. The USD continues to fall under pressure, marking a sixth consecutive day of decline, as markets increasingly expect the Fed to cut interest rates in September following the disappointing US jobs report last week. Global equity markets got an extra boost after the Kremlin confirmed that Presidents Putin and Trump will meet for summit talks within the next few days, increasing hopes of a truce in Russia's war with Ukraine. On Wednesday, three Fed policymakers voiced concerns about the US labour market, with all of them pointing to a potential interest rate cut in September. In tariff news, the US imposed an additional 25% levy on Indian goods, and 39% tariffs on Swiss goods imported to the US took effect today after a last-ditch effort to persuade the US President to lower the rate failed. Elsewhere, oil prices firmed on strength in US demand, Bitcoin prices slipped to $115,000, and Gold and Silver prices rebounded amid a softening USD. In focus today, the UK Interest rate decision, US Initial Jobless Claims, and the CAD Ivey PMI will help direct direction to currency markets.

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In other news. The Kremlin says Putin and Trump will meet in the coming days. Trump's new tariff regime deepens global trade war. Trump eyes 100% Chip tariffs, exempting firms that invest in the US. Air Canada offers a32.5% increase for flight attendants in contract talks. Trump announces $100 billion new investment pledge from Apple. The Bank of England is expected to cut UK interest rates to 4%. 'Fasten your seatbelt,' Ford warns on pending CUSMA renegotiation with Trump following meeting with Carney. European earnings lag behind those of the US as the trade war throttles market rival.

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In currency markets. The USD index continues under pressure, falling nearly 2% over the last six days, while the pound edges higher heading into the expected 25-basis-point cut by the Bank of England today. CNY & Asian currencies on average firmed by 0.1% against the USD. Trading currencies are mostly steady, with NOK falling 0.25%, JPY down 0.1%, MXN, CHF, KWD, SEK, and DKK flat, ZAR & CZK firmed 0.25%, and AUD & NZD rallied 0.4% against the USD.

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In commodity markets. Oil & Wheat prices strengthened by 0.8%. Natural Gas, Copper and Gold prices firmed by 0.5%, Silver prices rallied by 1.4% and Soybean prices are flat.

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CAD continues to edge higher, testing fresh weekly highs, up nearly 1% against the USD, as investors increasingly expect the Fed to cut interest rates in September. On the trade front, the Mexican President ruled out a bilateral trade agreement with Canada when asked about the possibility, following a "very good" meeting with top Canadian government ministers. The focus today will be on the Ivey PMI, a leading indicator of business activity in Canada, which is expected to improve to 55.2 in July, up from 53.3 in June.

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EURCAD steadies above the 1.6000 with investors sidelined ahead of the Ivey PMI report.

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EUR is sidelined in early trading as the USD stalls ahead of fresh US jobs data. The euro has rebounded by over 2% against the USD over the last week, as expectations grow that the Fed will cut rates by 25 basis points in September, following worsening US job reports. Looking beyond the ongoing US tariffs, the announcement of a US/Russia meeting on Ukraine has lifted global risk sentiment and could provide additional support to the euro. Intraday, the US Jobless Claims will help provide direction to the single currency.

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GBPEUR rallies in early trading as the pound rebounds heading into the Bank of England interest rate decision.

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GBP rallies through 1.3400 ahead of the BoE and improving risk-on sentiment. The pound got a boost from a number of Fed policymakers' comments on Wednesday, after each policymaker suggested the potential of a Fed easing in September. Expectations that the Fed and UK interest rates are not expected to diverge in 2025 help provide a boost to the pound, which hadfaced significant selling pressure ahead of today's expected 25-basis-point rate cut. Intraday investors will be monitoring the BoE Governor Bailey's speech for signals of future bank direction and the US Initial Jobless claims for direction.