The USD is steady, oil prices edge higher, equity markets are up, and US yields eased as risk sentiment improves. Currency markets are sidelined ahead of the release of the US GDP on Thursday and the Personal Consumption Expenditures reading on inflation on Friday. Equity markets rallied as futures pointed to another record high for Wall St., as markets wager that the central banks will start cutting interest rates into Q2/24. "We are heading into an environment where the economic slowdown seems to be more of a soft landing; at the same time, we are talking about rate cuts," said Jun Bei Liu, a fund manager at Tribeca Investments Partners in Sydney. Elsewhere oil prices steadied as OPEC member Libya restarted output at its largest field, boosting global supply and assisting in offsetting the impact of tensions in the Red Sea. This week, Tuesday's BoJ interest rate decision, ECB lending survey, Wednesday's European & UK PMI releases, BoC interest rate decisions, and US PMI results. Thursday, the ECB interest rate decision, US GDP, Initial Jobless claims, and Friday's Core Personal Consumption Expenditures - Price Index.
In other news. Haley, Trump campaign in New Hampshire a day before the pivotal vote. Israeli plan to destroy Hamas not working, peace talks needed -EU's Borrell. The US authorities say more Boeing 737 planes should get checks after MAX 9 incident. Poland's Tusk pledges to a quick end to friction as he visits Ukraine. Storm Isha hits travel and power services across the UK. China's residential foreclosures increase 43% in 2023. Beijing sets 2024 growth targets higher despite slowing economy. Countries risk missing deadline for pandemic accord, says WHO chief. The US FDA found new manufacturing lapses at the Eli Lilly plant. Canada weighing extra border measures for asylum seekers from Mexico, minister says.
In currency markets. China moves to support the CNY as economic concerns grow. G10 currencies hold steady ahead of a busy week of key economic releases, including interest rate decisions from Canada, the ECB, and Japan. CNY is flat, while Asian currencies slip 0.2% on average vs USD. Trading currencies are mixed, with ZAR weakening to 0.7%, NOK falling 0.3%, AUD down 0.15%, while MXN & CHF are flat, JPY & NZD are up 0.1%, and SEK firms 0.2% vs USD.
In commodity markets. Oil prices firmed by 0.35%, Natural Gas prices tumbled by 5.6%, Gold prices slipped by 0.2%, Silver prices weakened by 1.9%, Copper and Wheat prices eased by 0.6%, and Soybean prices are flat.
CAD opens unchanged from Friday's close, sitting above 1.3400 as investors are cautious ahead of a busy week of crucial US inflation data releases and the Bank of Canada's interest rate decision on Wednesday. Markets expect the BoC to keep interest rates on hold on Wednesday, expecting the BoC to maintain a cautious tone, with many investors anticipating that interest rates will remain on hold until the summer. Intraday, with the lack of any high-tier economic releases, we anticipate the loonie will hold within a relatively tight trading range.
EURCAD slipped in early trading as oil prices edged higher in early trading, providing the loonie a slight edge in quiet trading.
EUR slips below 1.0900 in quiet trading. The euro slipped in early trading despite improving risk sentiment as investors held on the sidelines ahead of Thursday's ECB interest rate decision. ECB President Lagarde attended a panel at the World Economic Forum on Friday; she commented that inflation levels are easing but stopped short of commenting on the ECB's policy outlook. With the lack of high-tier economic releases today, we expect markets to remain on the sidelines ahead of the EU PMI data on Wednesday and Thursday's critical ECB interest rate decision.
GBPEUR ticked higher in quiet trading as the euro slipped as investors adjusted positions ahead of the ECB interest rates on Thursday.
GBP straddles 1.2700 as investors are sidelined to start the trading week. The pound holds steady, supported by improving risk-on sentiment as the USD is sidelined without any high-tier economic releases. The pound staged a rebound on Thursday, erasing a significant portion of its weekly losses, but technically, the pound remains in a longer-term bearish channel. This week's focus will be on Thursday's and Friday's US inflation data releases to help provide direction for the pound.
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