The Morning Update

The US$ is flat, oil prices slips, equity markets are down, whileUS yields are mixed as corporate earnings weigh on markets. Currencymarkets are sidelined, while equity markets are under pressure as investorsanalyze a flood of European and US corporate earnings reports from some of the world’sbiggest companies. Bank earnings saw UBS & Santander miss expectations,while US First Republic Bank plunged more than 20% in pre-market tradingafter results that reignited concerns. Focus will be on Microsoft& Alphabet later this morning when they report results. Alongsidecorporate earnings investors will also be monitoring US Housing PriceIndex, Consumer Confidence & Richmond Fed Manufacturing Index to helpprovide intraday direction to currency markets.

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In other news. US President Biden launches reelection bid,saying "let's finish the job". Allies resist US plan to ban allG7 Exports to Russia - FT. Sudan's warring parties agree 72-hourceasefire, US says.  India passed China as world's most populous countryin April, UN says. Putin ally: We are probably on verge of a new world war- Reuters. First Republic bank: More than $100bn of withdrawals in Q1/23.Remote work demands drag out Canada civil-service strike.

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In currency markets. The US$ steadiesas bank jitters resurface, Euro slips and risk-off sentiment grows. Argentina'speso hits record lows in black market, stokes market jitters. CNY sits atlowest level in almost 2-months, while KRW rebounds from 1% fall on suspectedintervention. CNY weakens 0.35%, while Asian currencies are down 0.25% onaverage vs US$. Trading currencies are mixed with ZAR drops 0.55%, AUD down0.45%, NOK falls 0.35%, SEK weakens 0.25%, while NZD & MXN areflat and CHF up 0.1%, JPY gains 0.3% vs US$.

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Oil prices slip as safe-haven buying returns as banking sector jittersgrow after weak bank earnings offsetting China demand hopes. C$ slips to freshmonthly lows in early trading as the US$ comes back into favor as risk-offsentiment reignites after First Republic Bank earnings report showed depositsfell by $100bn and the bank didn’t take questions after the earnings report. Weexpect the loonie to remain on the back-foot in the short term as markets awaitUS Durable Goods & GDP data and the Fed rate decision May4th. Support resets to 1.3500, while resistance rises to 1.3625.

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EURCAD edges up to a fresh 18-month highs with the prospect of furtherECB rate hikes underpinning support for the Euro over Cad.

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Euro holds above 1.1000 as bank earnings causes investor concern. Euroslipped in early trading as investors balance hawkish ECB comments settingmarkets to expect possibly two further rate hikes vs a cautious market moodafter the release of bank earnings. We expect to see Euro hold within recentranges as investors await tech earnings and mid-tier economic data today. Wesuspect investors will remain somewhat sidelined heading into keyUS Durable Goods and GDP data releases on Wednesday & Thursdayfor direction. Support holds at 1.0980 while resistance remains at 1.1090.

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GBPEUR holds steady as investors remain sidelined ahead of key US datathis week. Support holds at 1.1260 while resistance remains at 1.1370.

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GBP remains capped at 1.2500 amid increasing risk aversion. The poundweakens from Monday's highs as safe-haven US$ buying returns on increasingconcerns after First Republic Bank earnings report shows significant depositwithdrawals and worries over the banks direction after they failed to takequestions. Expect the pound to hold near the lower end of its recent range asinvestors are sidelined waiting for key US economic data releases on Wednesday& Thursday. Support holds at 1.2400 and resistance remains at 1.2500.

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