The Morning Update

The USD is lower, oilprices and equity markets hedges higher, while US yields trends lower. Themarket had little reaction to yesterday’s higher than expected PPI reading andthe release of the FOMC minutes. While there were some conflicting opinions forthe need for further hike, they all agreed that the rates should remain highuntil they are convinced inflation is heading toward 2%. CPI to be releasedlater this morning. Currency markets are stable to start the day. Israelimilitary is said to be preparing for a ground operation in Gaza. Egypt rejectsa proposal that would establish a corridor out of Gaza. Israel will not pausetheir operation for a humanitarian break unless hostages are released.

In other news.  Louisiana GovernorScalise was nominated by Republican to be the next speaker. The GOP is stilldivided and it’s not sure if he will have enough support from within his partyto be elected. UAW widened their strike when their members walked off their jobat Ford’s most profitable plant.

In currency news. ECB’s Wunsch said thatmaybe we’ve reached the peak in interest rate adding that if the inflationforecast is accurate there will be no need for further hike. The Shekel remainsunder pressure this morning. Most Asian currency are flat this morning exceptfor the THB which strengthen 0.7%. AUD and NZD are lower by 0.1% and 0.3%respectively. In other trading currencies the ZAR is flat, and the MXN hedgedhigher 0.15%

In commoditynews. Gold hedges higher(0.4%), oil is up 0.8% as Saudi Arabia continue voluntary production cutsdespite the Middle East conflict, Nat gas down 1.1%, Copper up 0.8%, Wheat isunchanged while Soybean is up nearly 0.4%.

CAD continues to tradein a narrow range – perhaps this morning’s CPI release will generate somevolatility.

EURCAD is keeping itsrecent gains while trading within a narrow band.

EUR ECB’s governingCouncil member Centeno, Wunsch and Villeroy’s comments are all pointing to apeak in interest rates. The market did not react to these comments remainingstable ahead of the US CPI.

GBPEUR snapped itswinning streak despite uninspiring economic data from the UK.

GBP UK economyexpanded by 0.2% in the last GDP reading in line with expectations. There waslittle to no reaction to the GBP on the release of the news.

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