The Morning Update

The USD starts the day slightly lower; equity and oil prices hedges higher while treasury yields are mixed. Yesterday’s US Initial Jobless Claims data rose to an eight-month high of 231K, surpassing estimates of 210K. The U.S. dollar steadied in early trading after losing ground on the back of U.S. data and hence higher odds of Fed rate cuts this year.

In other news.  Netanyahu has vowed Israel can "stand alone", after the US warned arms shipments could be stopped if he orders a full-scale invasion of Rafah in Gaza. UN to vote on resolution that would grant Palestine new rights and revive its UN membership bid – the US have made it clear that it opposes the resolution. Philippines calls for expelling Chinese diplomats as South China Sea row escalates. At issue is the recent ramming and water-cannoning of Philippine ships at two disputed shoals, the closest of which is 850km from mainland China. China military says it 'drove away' US destroyer in South China Sea. Upcoming Ukraine peace summit, ostensibly the most ambitious bid in years by neutral Switzerland to mediate a major conflict, is instead showing how Swiss economic and security interests increasingly align with Western Europe over Russia.

In currency news. The MXN continue to strengthen this morning (up 0.03%) after the Central Bank kept interest rates unchanged. The USD remains strong against the JPY (up 0.15%) as the rise in US Jobless is offset by Japan’s current account surplus. The USD gained 0.08% against the CNY, 0.33% against the NZD and 0.17% against the AUD. The ZAR appreciated 0.26% against the US as we start the last trading day of the week.

In commodity markets. Oil set for a weekly gain, up 0.7% today, as the US and China pointed to a higher demand coupled with the Gaza war uncertainties. Gold rallied 1.1% after higher-than-expected US Jobless Claim announcement - market reassesses the timing of a Fed rate cut. Silver and Copper followed gold rising 0.13% and 1.4% respectively. As for the agricultural commodities, wheat (up 2.3%) hit a 9-month high on concerns over Russia’s crop while soybean price rose 0.3%.

Current level USD Index               105.205           Down 0.04%

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The USD/CAD remains strong despite yesterday's higher than expected Jobless Claims. Canadian employment figures are set to be released this morning followed by the US Michigan Consumer sentiment index.

Current level USD/CAD               1.3680            Up 0.05%

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The EUR/CAD remains in a tight range as we await the Canadian employment numbers.

Current level EUR/CAD                1.4749           Up 0.02%

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EUR/USD is stuck in a tight range as investors have already discounted an ECB rate cut as early as June. While easing US labor conditions increases the prospect of a US rate cut.

Current level EUR/USD                1.0780           Down 0.02%

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GBP/EUR gains ground as the UK economy is officially out of recessions after GDP grew by 0.6%. Of note, as expected the BoE kept rates unchanged yesterday with Governor Bailey noting that an interest rate cut next month is a possibility.

Current levelGBP/EUR     1.1624 (0.8601)        Up0.11%

GBP/USD Britain's economy grew by the most in nearly in three years in the first quarter of 2024, ending the shallow recession it entered in the second half of last year.

Current levelGBP/USD                1.2528           Up 0.06%

Other ccy levels vs C$. GBPCAD 1.7143 AUDCAD .9042  CADCHF.6627 CADJPY 113.65  CADTHB 26.81 CADCNY 5.2791  CADNOK 7.9099 CADSEK 7.9212 CADDKK 5.0589  CADZAR13.4462

Other ccy levels vs USD. JPY 155.75 CHF.9065  AUD.6608 NZD .6013  CNY 7.2245  MXN 16.7519  INR83.4840  PLN 3.9891 CZK 23.141 ZAR 18.3953  ILS 3.7236  AED 3.6724 KWD 0.30736

Other Major X levels. EURCHF.9770 EURJPY 167.85  EURSEK 11.6836 EURNOK 11.6624 GBPCHF 1.1361 EURAUD 1.6305  GBPAUD 1.8957 AUDCHF.5992  AUDJPY 102.94 CHFJPY 171.89

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