The Morning Update

Tuesday November 7th, 2023

Written by:
Bernard Gauvin

The USD moved higher while equity markets oil and us yields hedged lower ahead of Powell’s speech later today. Israel would consider a tactical pause to let hostages leave or aid to get through but to bow to international pressure when it comes to a cease fire. Netanyahu said that Israel will take overall security responsibility on Gaza – indefinitely. Blinken visited Turkey to keep the Israel/Hamas war from spreading to a regional battle.


In other news. Russia officially withdrew from security treaty which limits key categories of conventional armed forces blaming the US with the widening of the NATO military alliance. G7’s support will not waver due to the Middle East conflict.


In currency news. RBA raised their key interest rate this morning as expected but dovish comments are keeping the AUD under pressure. The IMF have revised China’s growth forecast from 5% to 5.4% while expecting for a slower growth in 2024. Asian currencies lost ground this morning with CNY down 0.20%, MYR 0.75%, IDR 0.1%, JPY0.18%, THB and PHP are off 0.17 and 0.25% respectively. AUD is off over 1% while the NZD 0.7%. MXN is flat to start the day while the ZAR is off 0.35%

In commodity markets. Oil prices are off this morning as mixed economic numbers coming out of China offset Saud Arabia and Russia’s extension of their production cuts. Nat gas off nearly 1%, Gold’s price remains under pressure down 0.8%, Silver down 2.25%, Copper down 1.4% While wheat and Soybean trade lower 0.6% and 0.3% respectively.


CAD sold off after the Ivey PMI survey missed expectation and the weakening of oil prices. Not much on the economic data front this morning but perhaps there will be some newsworthy comments from BoC Deputy Governor Kozicki speech later today.


 EURCAD continues to trade in a narrow range as the focus is clearly on the USD.


EUR sold off as Germany announced that their September Industrial Production continue to decline. Germany’s Harmonized index of Consumer Prices will be announced tomorrow.


GBPEUR remains under pressure this morning but remains firmly above its November lows.


GBP move higher paused and reversed today while hovering at 1-month high. Recession concerns are limiting as well as diminished risk appetite for the GBP are capping the GBP for the moment.