The Morning Update

The USD softens, oil prices retreat, equity markets are up, and US yields rise amid improving risk sentiment. The U.S. dollar eases in early trading as investors trim positions ahead of today's closely watched U.S. payrolls report, which is expected to provide fresh guidance on the Federal Reserve's interest rate outlook. Markets continue to price in one Fed rate hike by October, while President Trump said talks with Iran had gone well in Qatar, easing geopolitical tensions and improving overall market sentiment. Global equity markets are mostly higher in early trading, with European stocks advancing and U.S. futures holding firm, although Asian markets remain mixed following recent profit-taking in AI-related technology shares. Investors are now focused on today's closely watched U.S. payrolls report for fresh direction on markets and Federal Reserve policy expectations. Elsewhere, oil prices continue to retreat as progress in U.S.-Iran talks eases supply concerns, with crude trading at fresh four-month lows. Gold prices are broadly flat ahead of today's U.S. payrolls report, while Bitcoin extends its rebound amid improving broader risk sentiment. Today's focus will be on the US jobs reports, with Nonfarm Payrolls and Average Hourly Earnings being the key reports that will help guide future Fed decisions.

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News Headlines. Russia launches massive strike on Ukraine as Poland scrambles jets, and Finland restricts airspace. Google loses fight over record $4.7 billion EU antitrust fine. OpenAI proposes handing the Trump administration 5% stake. Trump blocks the long-term renewal. of the North American trade pact (USMCA). Trump hails 'very good meetings" in Qatar as indirect negotiations resume. Warsh says inflation outlook has improved, but won't say if the Fed should hike rates. China slaps 73.5% preliminary tariff on pea starch from Canada. 'Extreme weather' wipes out Ottawa's Canada Day activities, including fireworks.

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In currency markets. Against the U.S. dollar, major currencies are cautiously advancing in early trading as the greenback eases ahead of today's closely watched U.S. payrolls report, with investors trimming positions after recent gains. Improving risk sentiment following progress in U.S.-Iran talks is also supporting the euro, sterling and commodity-linked currencies, although markets remain focused on the U.S. labour data for fresh direction on Federal Reserve policy.

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In commodity markets. Oil -1.46% | Nat Gas -0.99% | Gold -0.17% | Silver -0.37% | Copper -0.60% | Palladium +2.01% | Coffee -0.17% | Cocoa -0.29% | Soybeans +0.47%

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CAD has recovered modestly from last week's 14-month low of 1.4248, supported by a softer U.S. dollar and improved broader market sentiment. However, gains remain limited as weaker oil prices and ongoing uncertainty surrounding the future of the USMCA trade agreement continue to weigh on the loonie. With North American trade negotiations expected to continue over the coming months, businesses are likely to remain cautious on investment and cross-border trade, limiting near-term support for the Canadian dollar.

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EURCAD edges higher in early trading as the euro benefits from a softer U.S. dollar, while the Canadian dollar remains constrained by weaker oil prices and lingering uncertainty surrounding the future of the USMCA trade agreement. The broader bias remains for EUR/CAD to stay firm while commodity prices remain under pressure and trade uncertainty weighs on the loonie.

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EUR advances through 1.1400 in early trading as the U.S. dollar eases ahead of today's closely watched U.S. Non-Farm Payrolls report. While the euro is benefiting from the softer greenback, expectations for fewer ECB rate hikes and easing energy prices are expected to limit any sustained upside in the single currency.

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GBPEUR edges higher in early trading as softer Eurozone inflation and easing expectations for further ECB rate hikes continue to weigh on the single currency. While markets await further guidance from the ECB and the Bank of England policymakers, the near-term bias remains in favour of sterling.

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GBP advances toward 1.3350 in early trading as a softer U.S. dollar supports sterling ahead of today's closely watched U.S. Non-Farm Payrolls report. While hopes that the UK's fiscal policy will remain unchanged under the expected leadership of Andy Burnham are providing modest support, the U.S. jobs data is expected to be the key driver for the pound against the dollar later today.