The USD steadies, oil prices remain firm, while equity markets and US yields are mixed ahead of the key US inflation report. The USD holds steady ahead of today's US inflation report, while CNY gains to six month highs following Monday's announcement of the Sino-US trade pact. Global equities are mixed with US futures easing, while Asian and European markets are mixed as optimism around tariff cuts between China-US give way to lingering concerns about inflation and economic growth. "The challenges are not over," said Carrier, Investment strategy head at RBC Wealth Management. "The de-escalation was a lot stronger than even the best hopes, but you have to remember that the US economy still faces average effective tariffs of more that 13%." Elsewhere, oil prices extend gains as oversupply fears recede, Bitcoin strengthens to $103.2k, as well, gold and silver prices strengthen. Focus today will be on the US CPI which is expected to hold steady at 2.4%, and CPI ex Food & Energy is expected to hold at 2.8% in April.
In the news. Honda Motor reports 76% plunge in operating profit in huge earnings miss. Tariff receipts topped $16 billion in April, a record that helped cut the budget deficit. PM Carney to announce major cabinet shakeup Tuesday, with many new faces going in. The EU readies capital controls and tariffs to safeguard Russia sanctions. Zelenskyy says he is ready to meet Putin in peace talks. Spain investigates cyber weaknesses in blackout probe. US tariff pause on Beijing puts pressure on 'China-plus-one' countries. Trump talks with MBS as he seeks Saudi investment. China removes ban on Boeing deliveries after US trade Truce.
In currency markets. Global currencies are flat across the board as investors step to the sidelines as focus shifts from tariffs and back to the economy and inflation levels. CNY & Asian currencies are flat on average against the USD. Trading currencies are sidelined, with the AUD, NZD, MXN, CHF, NOK, SEK, and DKK remaining flat, while JPY, ZAR, and KWD have increased by 0.1% USD.
In commodity markets. Oil & Natural Gas prices firmed by 0.7%. Gold & Copper prices strengthened by 0.8%. Silver prices rallied by 1.8%. Wheat prices tumbled by 1.4%, while Soybean prices eased 0.5%.
CAD steadies below 1.4000 after testing monthly lows at 1.4007 on Monday following the announcement of the US-China pause in tariffs. Domestically, foreign travel spending in the US declined by 7% in 2025, with travel from Canada expected to be down 20% year-over-year according to the WTTC. Friday's Canadian unemployment data has increased expectations that the Bank of Canada will cut rates again in June, after pausing in April. With oil prices trending higher, this should add some support to the loonie, but with the prospect of a more dovish BoC and no resolution to the US/Canada tariffs insight, we expect the Loonie to remain under pressure in the short term. Intraday, the US inflation report will be the primary driver for the loonie today.
EURCAD holds steady as markets are sidelined heading into the US inflation report today.
EUR straddles 1.1100 ahead of the key US inflation report. The euro recovered from Monday's initial weakness following the announcement of the US/China tariff pause, but the single currency remains capped without an EU/US tariff resolution insight. Domestically, the German and the EU ZEW Survey - Economic Sentiment in May significantly beat expectations, while the ZEW Survey - Current Situation eased more than expected. Following the pause in trade tariffs between the US and China, investors have shifted their focus back to the economy and the US inflation report.
GPBEUR holds steady, with investors sidelined, looking for fresh guidance.
GBP holds on to gains above 1.3200 heading into the US CPI report. The pound holds above 1.3200, but fails to recoup the lost ground from 1.33 following the US/China tariff pause. a tariff pause. a tariff pause. Domestically, UK unemployment rose slightly to 4.5% in the three months leading up to April, which was within expectations, while the average earnings, including bonuses, came out at 5.5% below Feb's 5.7%. Investors will be focused on the US CPI report and the Bank of England's Governor Bailey's speech today for signs of future interest rate direction.
For clients based in the European Economic Area, payment services for Payments International Inc. are provided by CurrencyCloud B.V..Registered in the Netherlands No. 72186178. Registered Office: Nieuwezijds Voorburgwal 296 - 298, Mindspace Nieuwezijds Office 001 Amsterdam.CurrencyCloud B.V. is authorised by the DNB under the Wet op het financieel toezicht to carry out the business of an electronic-money institution (RelationNumber: R142701).
Payment services in the United States are provided by Visa Global Services Inc. (VGSI), a licensed money transmitter (NMLS ID 181032) in the states listed here. VGSI is licensed as a money transmitter by the New York Department of Financial Services. Mailing address: 900 Metro Center Blvd, Mailstop 1Z, Foster City, CA 94404. VGSI is also a registered Money Services Business (“MSB”) with FinCEN and a registered Foreign MSB with FINTRAC. For live customer support contact VGSI at (888) 733-0041.
For clients based in the United Kingdom and rest of the world, payment services for Payments International Inc. are provided by The Currency Cloud Limited. .Registered in England and Wales No. 06323311. Registered Office: StewardshipBuilding 1st Floor, 12 Steward Street London E1 6FQ. The Currency Cloud Limited is authorised by the Financial Conduct Authority under the Electronic MoneyRegulations 2011 for the issuing of electronic money (FRN: 900199)
