The Morning Update

The USD edged higher, oil prices rallied, equity markets are up, and US yields gained as the US tariff ruling fuels global risk appetite. The USD edged higher towards its highest level in a week after a US Court of International Trade ruled that President Trump overstepped his authority by imposing his "Liberation Day" across-the-board duties on imports from US trading partners. Global equities extended gains after Nvidia Corp.'s better-than-expected earnings, coupled with the US ruling on US tariffs, lifted global risk sentiment. Dow futures climbed 1.1%, Nasdaq 100 futures gained 1.9%, S&P futures rose by 1.5%, and Nvidia shares jumped 5% in premarket trading. "This might be considered a body blow, but it's not the final rendering," Timothy Moe, the chief equity strategist for APAC at Goldman Sachs Group Inc., told Bloomberg TV. "Specifically, there are a number of other substitute acts that the Trump administration could employ to maintain tariffs." Elsewhere, oil prices rallied as risk appetite grew, and OPEC+ maintained production cuts amid tightening fundamentals, further constraining supply. Bitcoin strengthened to $108.4k, up 1%, finding support as VP Vance delivered remarks at the Bitcoin 2025 conference, while gold prices weakened as investors left safe-haven assets. In focus today, the US GDP will be the primary driver for markets. Still, markets will also be monitoring the US Initial Jobless Claims, Personal Consumption Expenditures Prices, Pending Home Sales, alongside speeches from BoE Governor Bailey, Fed's Barkin, Kugler, and Daly will help guide currency markets.

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In other news. US trade court says Trump's global tariffs are illegal. Nvidia jumps 5% in premarket trading as results spark chip rally. Elon Musk thanks Trump and says he's leaving government work with DOGE. The US to 'aggressively' revoke visas of Chinese students. Israel announces expansion of settlements in the occupied West Bank. China vows to open markets to Pacific Island nations as the US retreats. Trump orders US chip software suppliers to stop selling to China. Germany's economic minister urged Brussels to support the plan for heavy industry. Evacuation orders impact thousands as wildfires continue burning in Manitoba, Saskatchewan, and Alberta. Canada Post puts forward 'final offers' to union, posts $1.3B loss for 2024.

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In currency markets. The USD index gives back early gains as investors step to the sidelines ahead of the USD GDP, while commodity and safe-haven currencies. CNY is flat, while Asian currencies advance by 0.2% on average against the USD. Trading currencies advanced, with MXN up 0.1%, NZD and AUD firming by 0.25%, CHF, JPY, NOK, DKK, ZAR, and CZK strengthening 0.4% against the USD.

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In commodity markets. Oil prices rallied 1.5%. Natural Gas & Gold prices weakened by 0.5%. Silver prices strengthened by 0.85%. Copper prices firmed by 0.7%. Wheat prices fell by 0.4%, while soybean prices rose by 0.2%.

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CAD recoups some of Wednesday's weakness, retesting 1.3800 amid improving risk sentiment on the US tariff ruling and rallying oil prices. Investors are expected to remain cautious ahead of Friday's CAD GDP report, which will be a key indicator for the Bank of Canada's interest rate decision next week. Markets expect the BoC to keep its benchmark interest rate on hold at 2.75% on June 4th. Intraday sees a flurry of US economic data and Fed talk that will help drive direction for the loonie.

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EURCAD edges higher, with the single currency getting a greater boost from the US tariff court ruling, while CAD faces the potential renegotiation of the USMCA.

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EUR advances through 1.1250, retesting 1.1300 amid improving risk sentiment and ahead of the US data releases. The euro rebounded from its weakest level in over a week, nearly 1.1200, after getting a boost from the US Court of International Trade ruling against existing US tariffs. The USD gave back early gains as investors turned cautious ahead of today's US GDP report and Initial Jobless claims, ahead of tomorrow's critical US PCE price index and the German inflation report.

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GBPEUR slips in early trading as the US court ruling on tariffs provides more significant short-term benefits to the EU, as the UK has already set its trade deal with the US.

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GBP recovers, retesting 1.3500 as focus shifts to the US GDP report. The pound benefits from the shift to risk-on sentiment and waning US strength, with investors cautious ahead of two days of key US economic data releases. The US GDP annualized is expected to hold at -0.3%, while US initial jobless claims are expected to rise slightly to 230k, up from 227k in the previous week. If the US data comes in as expected, we expect investors to remain cautious ahead of the Bank of England's Governor Bailey's speech later in the afternoon, and Friday's critical Core Personal Consumption Expenditures - Price Index, which is the Fed's preferred measure of inflation.