The Morning Update

The US$ is flat, oil prices inch higher, equity markets rise, while US yields slip as US inflation report looms. The US$ holds steady, Bitcoin rallies past $30k, while global equities and US futures strengthen as investors look towards the release of Wednesday’s key US inflation reports which is expected to edge higher to 5.6% (y/y Mar) vs 5.5% in Feb and Thursdays US Producer Price Index. Today sees a quiet economic docket with just Fed’s Goolsbee, Harker & Kashkarl speeches to focus on.

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In other news. China’s consumer price growth eases, reflecting caution on the economy. The US Pentagon ‘working around the clock’ to find source of intelligence leak. US & Philippines launch the largest joint military exercise in decades. China signals readiness to further ease trade dispute with Australia. UK braces for ‘unparalleled’ disruption from doctors’ strike. Chinese aircraft, ships remain around Taiwan after drills end. US President Biden lands in NI for the 25th anniversary of the Good Friday agreement.

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In Currency markets. The US$ gives up early gains into the European open as markets set for the key US inflation report on Wednesday. CNY eases to 1-week low as down beat Chinese data suggests potential for a China rate cut. ZAR rebounds from recent weakness on better-than-expected factory data. CNY dips 0.1%, while Asian currencies are flat on average. Trading currencies are mixed with NOK weakens 0.3%, while NZD is flat, MXN firms 0.2%, AUD & JPY gain 0.35%, SEK & CHF strengthen 0.6%, and ZAR rallies 0.95% vs US$.
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Oil prices edge higher on China stimulus expectations, healthy Asian demand, and a drop in US crude stockpiles. C$ holds steady straddling 1.3500 ahead tomorrow’s key BoC rate decision where analysts believe the bank is caught in a no-win situation on rates and the majority expect to see interest rates will remain on hold. Today with no key data release we expect the loonie to remain range bound ahead of tomorrow’s BoC rate decision, US CPI & the FOMC minutes. Support resets to 1.3450 while resistance remains at 1.3540.
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EURCAD rallies as strong eurozone data supports further EBC rate hikes, while BoC is expected to keep its rate on hold. Support remains at 1.4650 while resistance holds at 1.4800.
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Euro rallies aggressively from Monday’s lows as EU data improves and expectations grow that the Fed is close to pausing. Euro rebounds from 1.0840 through 1.0900 as the US$ gives back early gains and Eur strengthens on improving Eurozone investor confidence and the bloc’s annualized Retail Sales beat estimates in March. Intraday focus will be on Fed speech but expect markets to be somewhat sidelined ahead of Wednesdays US inflation report. Support holds at 1.0850 while resistance remains at 1.0985.
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GBPEUR are flat as both currencies equally benefit from the weaker US$ and improving risk sentiment. Support holds at 1.1300 (.8849) while resistance remains at 1.1450 (.8733).
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GBP retests towards 1.2450 on a weaker US$. The pound strengthened, regaining traction on improving market sentiment as investors focus on Fed speech today ahead of tomorrow’s key US CPI report and the Fed minutes. Domestically the England braces for the most disruptive NHS walkout ever as junior doctors begin their four-day walkout in a dispute over pay. Intraday we expect the pound to be toppish as markets consolidate ahead of Wednesday’s key data releases. Support holds at 1.2400 while resistance remains at 1.2550.

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