The Morning Update

The USD trades sideways, oil prices equity markets, and US yields are up. Yesterday’s stronger US PMI reinforced the dollar and a cautious Fed outlook. Markets now turn to this week’s key releases, including CPI, retail sales, and Friday’s jobs report, for clearer direction on rates. Trump announced a deal to cut tariffs on Indian imports to 18% from 50%, in exchange for India halting Russian oil purchases and lowering trade barriers. Colombian President Petro arrived in Washington for a state visit, including a planned meeting with President Trump on Tuesday, after a year of strained ties over migration, drugs, and regional policy.

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News Headlines. French police raided X’s Paris offices on Tuesday as prosecutors widened a year-long investigation into suspected algorithm abuse and data extraction, and summoned Elon Musk for questioning in April following complaints about the Grok AI chatbot. Russia struck Ukrainian energy infrastructure with hundreds of drones and missiles on Tuesday, disrupting heating across multiple regions ahead of new peace talks.

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In currency markets.  AUD rose on Tuesday after the RBA hiked rates 25 bps to 3.85% and warned inflation would stay above target. Asian currencies were mixed as a firmer US dollar and falling oil prices kept risk sentiment cautious. The JPY is down 0.17% against the greenback, while the CNY THB and MYR are up +/- .12%. The high-yielding currencies have rallied against the US with the ZAR moving 0.34% higher and the MXN 0.38%.

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In commodity markets. Oil stayed under pressure as hopes for progress in US–Iran talks reduced supply risk premiums and kept sentiment cautious. Gold rebounded early Tuesday, rising nearly 5% after a 4% drop on Monday. Silver also recovered sharply, up about 8.5% following Monday’s 7% slide. Agricultural commodities are edging higher with Soybeans up 0.7%, wheat up 0.16% and lumber 0.42%.

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USD/CAD eased on Tuesday after two days of gains, with the Canadian dollar finding some support as the pair paused near recent highs and traders awaited clearer directional catalysts.

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EUR/CAD held firm near multi-month highs, supported by a weaker Canadian dollar as oil prices remained under pressure and broader risk sentiment stayed cautious, limiting demand for the commodity-linked loonie.

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EUR/USD slipped back, as strong US manufacturing data and news of a US–India trade deal boosted the dollar and eased shutdown-related uncertainty.

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GBP/EUR rose slightly but remains in a broader bullish consolidation near key support, with downside still limited.

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GBP/USD recouped part of its loss as sterling drew support from the Bank of England’s cautious stance, with markets focused on Thursday’s policy decision.

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