The Morning Update

The US$ slips, oil prices are steady, equity markets are mixed, while US yields firm heading into to the US inflation report. The US$, global equities and bond yields have stalled as markets await the crucial US inflation report which is expected to show inflation has dropped to 5.2% y/y Mar vs 6% in Feb, and may signal an end to the Fed aggressive rate hikes. Also, in focus today is the FOMC minutes that is expected to show us how close the Fed officials were divided on rate hikes in the wake of SVB & Signature bank failures.

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In other news. Swiss parliament meets for a second day over Credit Suisse rescue. The US proposes 56% vehicle emissions cut by 2032, requiring big EV jump. Leaked US intel document claims Serbia agreed to arm Ukraine. Taiwan says China planning to close airspace amid military drills. The IMF warns of ‘hard landing’ for global economy if inflation persists. Biden will use Northern Ireland trip to ‘keep the peace’. Russia & Ukraine tighten conscription rules ahead of springs hostilities.

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In Currency markets. The US$ slips slightly heading into the US inflation data. Russian RUB edges lower on falling exports & reduced FX supply. CNY is flat, while Asian currencies firm 0.1% on average vs US$. Trading currencies are mostly positive with ZAR down 0.25%, while JPY is flat, NZD & CHF are up 0.1%, MXN gains 0.2%, AUD & NOK firm 0.3%, and SEK strengthens 0.65% vs US$.

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Oil prices steady as markets await the key US inflation report. C$ holds steady heading into the Fed Minutes, the US CPI report and the crucial BoC interest rate decision & statement. The BoC has already paused its hiking strategy and given the US bank failures & mixed domestic data, the bank is expected to hold its benchmark rate unchanged at 4.5% anticipating that inflation will cool as higher borrowing costs take effect. Support resets to 1.3415 while resistance remains at 1.3520.

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EURCAD continues to edge higher, Euro has gained almost 10% in the last 6-months primarily driven by a BoC holding interest rates and an ECB remaining hawkish on further rate hikes. Support remains at 1.4650 while resistance holds at 1.4800.

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Euro steadies holding at two-day highs as markets consolidate ahead of the US CPI data. Euro appears to have stalled, losing its recovery momentum as investors are sidelined heading into the FOMC minutes and the US inflation report. Today the print from the CPI will dictate Euro direction, a higher-than-expected CPI print will put pressure on the Euro. Support holds at 1.0850 while resistance remains at1.0985.

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GBPEUR slips as the pound loses momentum and Euro retains its positive momentum supported by a hawkish ECB. Support holds at 1.1300 (.8849) while resistance remains at 1.1450 (.8733).

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GBP weakens from intraday highs but is holding above 1.24 heading into the US CPI report. The pound is struggling for direction as the US CPI dominants investors focus. The BoE is not scheduled to hold a policy meeting until May, Governor Bailey is scheduled to speak today and could give clues on the future path of UK monetary policy. Today US CPI will dictate intraday market direction. Support holds at 1.2400 while resistance remains at 1.2550.

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