The Morning Update

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The USD and equity markets are hedging higher to start the day, while oil prices are trading lower and treasury yields are mixed. Yesterday’s US CPI and Retail Sales missed analysts’ expectations and showed a slow down from previous readings reigniting talk of an early Fed rate cut.

In other news.  Slovak Prime Minister Robert Fico is in a stable but serious condition after being shot several times. Putin and Xi Jinping praised their friendship and deep ties in a joint appearance before the media. Putin said Russia and China wanted a political solution to the "Ukraine crisis" while Xi called for a two-state solution to the war in Gaza. A floating pier designed to increase the amount of aid getting into Gaza will be operational within days. Netanyahu was publicly challenged about post-war plans for the Gaza Strip by his own defence chief, who vowed to oppose any long-term military rule by Israel over the ravaged Palestinian enclave. Microsoft is asking about 700 to 800 people who are involved in machine learning and other work related to cloud computing to consider relocating outside of China.

In currency news. For a second day the USD lost ground against the JPY fueled by yesterday’s economic data. The CNY was also helped by improved sentiment towards China's property market and a stock market rebound that has lured back some foreign investors. The AUD snapped its three-day winning streak after the mixed Aussie employment data released. The USD is losing ground against the CNY (0.03%), JPY (0.16%), MYR (0.51%), while gaining on the AUD (0.28%) and NZD (0.22%). Trading currencies are mixed with the USD strengthening against the MXN 0.23% and weakening against the ZAR 0.29%.

In commodity markets. oil futures are off 0.23% to start the day, despite signs of stronger demand in the U.S. after slower than expected inflation and lower oil stocks. Gold prices hovers near a one-month high (up 1%) as signs of inflation stabilizing in the U.S. increased the likelihood of rate cuts. Silver hit its highest level since February 2021 before retracing 0.7%. Wheat slips 0.2% as strong US yield outlook offsets Russian crop losses. Soybean prices are up 0.2%.

Current level USD Index               104.376           Up 0.03%

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The USD/CAD pair recovers some lost ground during the early European trading hours. The modest rebound of USD provides some support for the pair. Investors will keep an eye on US Building Permits, Housing Starts, the weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and Industrial Production set to be released later today.

Current level USD/CAD               1.3625            Up 0.18%

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The EUR/CAD rallied yesterday extending the move that started in late April culminating into reaching a new 2024 high.

Current level EUR/CAD                1.4811           Up 0.05%

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EUR/USD falls slightly during the European session. The major currency pair retraces as the USD stabilizes aftera sharp fall to fresh monthly lows. Investors are now focusing on upcoming US economic data.

Current level EUR/USD                1.0867           Down 0.13%

GBP/EUR is trading back inside a multi-month range after temporarily breaking out to the downside.

Current level GBP/EUR     1.1653(0.8577)        Up 0.02%

GBP/USD holds gains near 1.2700 amid cheerful market sentiment and UK’s steady wage growth keeps BoE rate-cut context uncertain.

Current level GBP/USD                1.2665           Down 0.15%

Other ccy levels vs C$. GBPCAD 1.7262  AUDCAD.9097  CADCHF.6623 CADJPY 113.19  CADTHB 26.50  CADCNY 5.2940 CADNOK 7.8511 CADSEK 7.8384 CADDKK 5.0357  CADZAR 13.3705

Other ccy levels vs USD. JPY 154.67  CHF.9026 AUD.6674 NZD .6107  CNY 7.2164  MXN 16.7229  INR 83.4837 PLN 3.9194 CZK 22.698 ZAR 18.2252  ILS 3.6785  AED 3.6729 KWD 0.30689

OtherMajor X levels. EURCHF.9809  EURJPY 168.14  EURSEK 11.6168 EURNOK11.6321 GBPCHF 1.1435  EURAUD 1.6281  GBPAUD 1.8983 AUDCHF.6025 AUDJPY 103.25  CHFJPY 171.37