The Morning Update

The USD trading lower, equity markets are up, oil prices are off while treasury yields are up. US Dollar Index extends its losses after mixed US data. The US purchasing managers index fell to 51.4% as ADP employment change added 184k. Fed’s Powell said that the interest rates is likely at their peaks in the current cycle.

In other news.  Pressure is growing on the UK government to suspend arms sales to Israel after seven aid workers. Biden is due to speak with Israel's Prime Minister Netanyahu later - their first direct contact since the air strike. Rescuers search through rubble for survivors as Taiwan reels from earthquake. Of note 92% of the world’s most sophisticated chips are manufactured by Taiwan Semiconductor. While not greatly affected by the earthquake it remains a risk in the long term.

In currency news. Tame Swiss inflation opens door for more SNB rate cuts,weighs on CHF. The BOJ cut its economic assessment for most regions but signalled its confidence that wage hikes were broadening, leaving scope for another hike. India's central bank likely sold U.S. dollars after the INR slipped to a fresh record low. The USD is flat against the JPY, while the AUD and NZD hedged up 0.6% against the greenback. MYR and INR are stronger this morning up 0.34% and 0.12% respectively. While the trading currencies are mixed with the ZAR appreciating 0.36% and the MXN losing 0.07% of its value.

In commodity markets. Gold prices retraced 0.2% after posting their fifth straight record peak as Fed official reiterated expectations of interest rate cuts in 2024, Silver is off 0.5%. Copper prices continue to hedge higher 0.9% in early trading, Wheat and soybeans hedged higher, although gains in the wheat market were limited by plentiful Russian supplies.

The USD/CAD hedged lower to start the day as oil prices reached theirhighest level in 6 months and the US PMI came out weaker than expected.

The EUR/CAD is trading around yesterday’s high with little volatility as we start the day.

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EUR/USDi s rebounding and trading back above 1.0800, following the release oflower-than-expected PMI data from the US. The data increases the chances of a Fed rate cut at the June meeting bringing it more in line with the expectations ofthe ECB’s rate cuts.

GBP/EUR continues to hedge lower in part due to the easing of global inflationary pressures which leads to speculation about potential interest rate cuts by central banks.

‍The GBP/USD Is showing signs of strength given the recent data that has shown that the economy is on track to return to growth after falling into a technical recession in the second half of 2023.

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