The Morning Update

US$ weakens, oil prices ease, equity markets gain, while US yields are mixed after upbeat Chinese data. China's economy grew at a faster-than-expected pace at 4.5% y/y in Q1/23, as the end of covid curbs were lifted consumers and businesses out of pandemic disruptions, although global slowdown has many analysts worried about china maintaining growth its levels for the rest of 2023. "Concerns about an upcoming recession have pushed investors' allocation of equities vs bonds to the lowest since 2009, according to BoA global fund manager survey. At the same time, strategists at the bank said the extreme bearishness could signal a turning point." Bloomberg. Today US bank earnings, US Building Permits, Housing Starts, CAD BoC CPI, BoC Governor, Fed Bowman & ECB Elderson speeches will help provide intraday direction to currency markets.

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In Other News. EU Parliament to cast final vote on Europe's biggest climate change policy. Strong UK pay growth boosts chances of a BoE Interest rate hike. President Putin visits two regions of occupied Ukraine, Russia steps up assault on Bakhmut. European shares hold near 14-month highs supported by strong Q1 China growth. US Blinken warns Sudan's warring generals after US convoy faces fire. Once-dominant foreign auto brands pledge comeback in China as they take the stage at the Shanghai auto show.

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In Currency Markets. UK pay growth helps rally the pound. US$ eases as risk-sentiment improves after stronger-than-expected Chinese GDP data. CNY holds steady despite strong Q1 GDP data, as investors remained concerned of global slowdown in the latter part of 2023. CNY is flat, while Asian currencies firm 0.1 on average vs US$. Trading currencies improve with MXN gains 0.1%, while NOK edges higher 0.2%, JPY & CHF up 0.25%, SEK firms 0.4%, AUD & NZD strengthen 0.5% and ZAR rallies 0.7%.vs US$.

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Oil prices ease on ongoing global economy worries, despite upbeat China growth data. C$ edges higher in early trading as risk-sentiment improves and the US$ eases. Canada's inflation report for March will be released today and is expected to show that inflation has slowed significantly to 4.3% y/y march from 5.2%. Following the Inflation data markets will shift their focus to BoC Governor Macklem's speech, with falling inflation levels investors will look to the Governor comments for signs of the banks future direction on interest rates. Support shifts to 1.3333 while Resistance lowers to 1.3420.

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EUR/CAD edges higher ahead of CAD's inflation data which is expected to confirm that the BoC will maintain it's strategy on Canadian interest rates. Support holds at 1.4610, while Resistance maintains at 1.4750.

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Euro gains as risk sentiment improves and the US$ gives up Monday's gains. Euro gains, but fails to breach 1.10 after German & Eurozone ZEW Survey, Economic Sentiment both decline significantly beyond expectations in April. Euro managed to override the weak ZEW data as investors focused on the better-than-expected China GDP data which boosted risk-sentiment. investors shifted focused to the US Housing starts for intraday direction. Support holds at 1.0900 while Resistance remains at 1.1000.

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GBP/EUR is flat as the currency pairs move in tandem supported by the China GDP report, with both currency pairs steady heading into US Housing data today. Support hold at 1.1250 (.8888) and Resistance remains at 1.1400 (.8719)

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GBP strengthens amid upbeat data and a weaker US$. The pound strengthens on a combination of stronger-than-expected UK Wage data rising 5.9% in 3-months to Feb. The UK unemployment rate also edged higher to 3.8%, its highest level since Q2/22 and higher than expectations at 3.7%. The spike in UK wages is expected to put pressure on the Bank of England to continue to raise interest rates at its next meeting in May. Today focus will be on US Housing starts for possible intraday direction. Support rises to 1.2370 while Resistance resets to 1.2480.

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