The Morning Update

 The USD is hedges lower,oil prices and equity markets are up, while US yields rises. Currency market remainsvolatile, crude continues its move upward as the market digests the recentdevelopment in the Middle East. After an unprecedented attack by Hamas, Israelformally declares war on Hamas and launched military strikes, imposed a ‘totalblockade’ on the Gaza strip and called up 300,000 reservists to execute theirmilitary operation. Biden will be providing additional assistance to Israel defenseforce with more to follow in the coming days. While important economic figuresare to be released this week, the Middle East situation will remain the keyfocus for market participants for the upcoming days.

In othernews. 

Three General MotorsCanadian plants are going on strike after negotiations failed to produceresults. While some progress had been made, Unifor’s president said that sadlyit wasn’t enough. The two parties remain at the bargaining table. IMF’s chiefeconomist says global economy is ‘limping along’ cutting China and Euro area’sgrowth forecast and the US.

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Incurrency news. Euroclimbs to two-week highs past 1.0600 as it gathers fresh steam against the USD.ECB’s Lagarde speaks later today at the IMF/World Bank’s meetings. Investorsbelieve that the ECB will halt their rate rise campaign and that the Fed willhold off raising rates in the coming months. China to unveil plans of extrastimulus to support growth. Speculations of a USD/JPY intervention remainsstrong. Israel's shekel hit its weakest level since early 2016.

CNY and Asiancurrencies are flat on average vs. USD. Trading currencies are mixed with JPYweakening 0.20%, AUD and NZD slipped 0.1%, CHF strengthen 0.2% SEK (0.4%) while NOKis off 0.55%. MXN loses ground (0.12%) while the ZAR is rallying over 1% vs.USD.

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Incommodity news. Sincethe close on Friday, oil has rallied more than 4%, Natural gas up 1.8%, gold isup 1.25%, Copper prices are flat, Wheat is down 1% while Soybean remainsstable.

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CAD has benefited from thesurge in oil prices related to the Middle East conflict. Comments from DallasFed president (hinted at a reduced need to raise rates) and Fed Vice-ChairJefferson (emphasizing the importance of proceeding cautiously with additionalrate hike) have also helped the Loonie. US to release PPI and FOMC minutestomorrow.

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EURCAD bounced back afteryesterday’s sell-off and is consolidating in the mid 1.4300’s.

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EUR hedges higher ahead ofLagarde’s speech. ECB’S Villeroy commented that at this stage further rateincrease are not the right thing to do. On the economic docket, Germany’s consumerprice index will be released tomorrow.

GBPEUR retraces from neartwo-week high, has it falls below 1.1600.

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GBP stabilizes afterrecovering from a six-month low. BoE’s Mann called for a more aggressive standin bringing down inflation towards 2%. UK manufacturing and constructions havebeen facing the greatest headwind related to high inflation.

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