The Morning Update

Tuesday April 2^nd,2024

We start the day with the USD trading a little lower, equity markets mostly lower,oil trading up and treasury yields slightly lower. With little in the form ofeconomic data today the market has had a sluggish start. Markets are focusing on Friday’s employment figures.

In other news.  Iran accuses Israel of attacking the building next to the Iranian embassy killing a senior commander. US said to have approved weapons sales to Israel. Israeli officials agree to consider US concerns about Rafah offensive. Major Russian refinery hit by Ukrainian drone 1,300 km from the front lines. North Korea fires intermediate-range ballistic missile into East Sea.

In currency news. Japanese Finance Minister Shunichi Suzuki said authorities were ready to take appropriate action against excessive exchange-rate volatility. China's yuan slides to 4-1/2-month low despite state banks' dollar sales and strong guidance. The Australian and New Zealand dollars were pinned near their recent lows on Tuesday while bonds took a hit as strong U.S. data dealt another setback for global rate cut hopes, elevating the greenback broadly. Asian currencies continue to remain under pressure with THB down 0.2% (down 6.9% for the year),MYR down 0.5% to a 5-week low, AUD and NZD bounced back 0.22% and 0.05% respectively. The ZAR rallied 0.62% while the MXN hedged up 0.06%.

In commodity markets. Oil is up nearly 2% after Russia’s 3^rd largest refinery was attacked by Ukrainians drones. Natural gas is slightly off to start the day. Gold prices hovers below a record high hit in the previous session, as the dollar and Treasury yields held firm after strong U.S. data flagged doubts on whether the Federal Reserve would deliver three interest rate cuts this year. As for other metals, Silver up 0.5% Copper up 0.21%. As for the agricultural commodities, Wheat is down .75%, Soybean up 1%.

Currentlevel USDIndex               104.975            Down 0.04%

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The USD/CAD continue to remain strong against the CAD given the reduced chance of a June Fed rate cut. The rise in oil prices is limiting it’s gain at the moment. All eyes on Friday’s Canadian and US employment figures.  

CurrentlevelUSD/CAD               1.3563             Up0.04%

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The EUR/CAD remains under pressure trading near the mid-February lows. Slow growth and lower inflation are giving the ECB some room to consider a lowering of rates.

Current levelEUR/CAD                1.4466            0.08

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EUR/USD continue to trade lower after stronger US data reduced the probability of the Fed cutting interest rates in June. PMI figures show that the Euro zone factory downturn deepened again in March.

CurrentlevelEUR/USD                1.0739            Down0.03%

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GBP/EUR is moving lower after it’s recent gains due to a downbeat UK housing data.

Currentlevel GBP/EUR     1.1694 (0.8547)        Down 0.11%

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The Pound Sterling hedges higher after an upbeat Manufacturing PMI for March. The PMI of 50.3 (showing an expansion) was higher than the market expected. UK shop prices rise at slowest pace since December 2021 dropping to 1.3% from February’s 2.5%. Investors at the end of last week were putting a roughly 50% chance of the BoE cutting interest rates in June.

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