The Morning Update

Thursday May 9th , 2024

Written by:
Bernard Gauvin

The USD continues its move higher, equity markets are lower, oil prices and treasury yield are moving higher. With limited economic data, the market seems to be driven by Fed official’s comment –in particular yesterday’s Fed’s Collins comments that reiterated the need for a period of moderation in the US economy to achieve the central bank's 2% inflation target. On the US political front, attempt to oust Speaker Johnson fails but GOP turmoil remains.


In other news.  Biden to halt some arms supplies to Israel if they invade Rafah. The Kerem Shalom crossing was reopened allowing humanitarian aid to flow into Gaza. President Putin accused the West of risking a global conflict and said no one would be allowed to threaten the world's biggest nuclear power. A prominent Berlin politician was violently assaulted and suffered injuries, in the latest attack on elected officials that raises concern over rising political violence ahead of June’s EU elections. Despite not being recognized by Ukraine, Kosovo is convinced tha tUkraine must win to avoid further aggression in Europe from Russia.


In currency news. The MXN is trading down 0.25% ahead of key inflation data and the Bank of Mexico policy meeting.The USD/JPY continues to hedge higher (up 0.28%) but market remains cautious of a potential central bank intervention. The USD gains 0.05% against the CNY, 0.10% against the NZD and 0.30% against the AUD. Trading currencies are mixed with the USD declining 0.28% against the ZAR.


In commodity markets. Oil prices rose 0.8% on the news that US stockpiles fell, and that China's April crude oil imports rose 14% over last April’s. China’s copper import fell 7.5% from prior month as recent surges in global prices (up 13% in April) dampens demand. Copper prices are down 0.28%, while gold and silver prices are up 0.16% and 1.17% respectively. On the agricultural commodities, wheat prices rose 1.7% as Russia declares state of emergency is key grain-growing area due to frosts. Soybean prices rose 0.35% on the back of China’s 18% increase in imports when compared to the previous year.


Current level USD Index               105.715           Up 0.16%


The USD/CAD continues to benefit from the Fed’s hawkish stance with expectation that the US central bank will keep high interest rates longer. Yesterday’s stronger than expected Canadian PMI– the 9th monthly increase could not offer meaningful support for the Loonie.


Current level USD/CAD               1.3724            Up 0.03%


The EUR/CAD retraced from its 2024 high but remains within striking distance from the level.


Current level EUR/CAD                1.4733           Down 0.12%

EUR/USD remains under pressure as continued hawkish Fed official comments emerge. On the economic data, Europe’s retail sales had its most significant increase since September 2022 signalling a positive shift in consumer spending.


Current level EUR/USD                1.0736           Down 0.09%


GBP/EUR remains under pressure as the BoE is expected to maintain interest rates’ level stable but is expected to cut rates prior to the ECB. ECB’S Wunsch said he sees a path for a first rate cut in 2024 but outlook remains uncertain.


Current level GBP/EUR     1.1636 (0.8590)        Up0.09%


GBP/USD edged lower ahead of the BoE policy meeting, where it is expected to hold rates steady. Comments on the timing of a rate cuts are what the market participants will be focusing on.

Current levelGBP/USD                1.2475           Down 0.14%



Other ccy levels vs C$. GBPCAD 1.7137 AUDCAD .9025  CADCHF.6625 CADJPY 113.29  CADTHB 26.87 CADCNY 5.2641  CADNOK 7.9545 CADSEK 7.9535 CADDKK 5.0612  CADZAR13.4765


Other ccy levels vs USD. JPY 155.92 CHF.9092  AUD.6575 NZD .5999  CNY 7.2260  MXN 16.9328  INR83.4850  PLN 4.0001 CZK 23.236 ZAR 18.5085  ILS 3.7398  AED 3.6734 KWD 0.30768


Other Major X levels. EURCHF.9756 EURJPY 167.33  EURSEK 11.7154 EURNOK 11.7155 GBPCHF 1.1331 EURAUD 1.6313  GBPAUD 1.8949 AUDCHF.5982  AUDJPY 102.55 CHFJPY 171.30