The Morning Update

The USD firms, oil prices ease, equity markets are up, and US yields rise as risk-on sentiment improves. The USD regained some ground in early trading, while the Japanese yen tested fresh 34-year lows vs. the USD despite stepped-up intervention warnings. Equity markets remain optimistic, but mixed earnings in banking & the luxury sectors stem the market rally. Tesla jumped more than 10% in premarket trading after accelerating the launch of less-expensive cars to boost demand. Elsewhere, US treasuries ticked higher, oil gave up early gains despite falling crude stockpiles, and gold prices remain under pressure after dropping 2% on Tuesday. In focus today, CAD Retail Sales, US Durable Goods, and Non-defense Capital Goods Orders ex Aircraft to help provide direction to currency markets today.

‍

In other news. The EU conducts a 'dawn raid' on a Chinese security equipment supplier. The US Senate passes a $95 billion bill, including aid to Ukraine. Ireland forecasts a Euro 8.6 billion surplus this year. Mark Wiseman: Canadians 'got to start talking about ' lagging productivity. Better US-China ties but still deep disagreements as Blinken starts his visit to China. UK's Lloyds bank sees Q1 profit tumble on income squeeze. Top Russian defense official accused of taking bribes. 58% of Canadians are more inclined to consume food close to or past BBD.

‍

In currency markets. GBP rally stalls on profit-taking after its biggest one-day rally in four months on Tuesday. A senior ruling party official says a Yen's slide toward 160 could trigger action. Thai central bank says it intervened to ease baht volatility. CNY and Asian currencies are flat on average vs. USD. Trading currencies are mixed with SEK & NOK weakened 0.5%, CHF slipped 0.25%, JPY, ZAR & MXN are down 0.1%, NZD flat, AUD gains 0.25%, and IDR strengthens 0.4% vs USD.

‍

In commodity markets. Oil, gold & natural gas prices slipped by 0.45%, silver prices weakened by 0.65%, copper prices strengthened by 0.75%, wheat prices tumbled by 0.9%, and soybean prices are down by 0.15%.

‍

CAD slips in early trading with a rebound in the USD and on weakening commodity prices. Domestically, the focus will be on Retail Sales m/m, which is expected to turn positive to 0.1% in Feb vs -0.3% in January. Later in the afternoon, markets will focus on the BoC summary of deliberations, a summary of the Governing Council held about 2-weeks after the bank's interest rate decision. The US Durable goods orders aren't expected to be a significant market driver today, with investors likely sidelined for Thursday's US GDP & Personal Consumption Expenditures Prices for direction.

‍

EURCAD holds steady as markets appear sidelined ahead of Thursday's US GDP & PCE data releases.

‍

EUR fails to sustain gains above 1.0700 despite upbeat German IFO data. German IFO Business, Current Assessment & Expectations beat expectations, helping boost the Euro in early trading. Later in the day, US Durable Goods Orders data for March. If we see a weaker print, similar to Tuesday's US PMI data, we could see another round of USD selling.

‍

GBPEUR holds steady below 1.1650 in early trading. Still, with the absence of key economic releases for the EU & UK, investors will focus on US data releases for the remainder of the week to drive direction to the currencies.

‍

GBP pound holds on to Tuesday's gains, finding support from improving risk sentiment. The pound holds on to Tuesday's gains, which saw the GBP rally from 1.2340 to 1.2460, snapping a three-day losing steak. Chris Williamson, Chief Business Economist at S&P Global Markets, said, "The deterioration of demand and cooling of the labor market fed through to lower price pressures, as April saw a welcome easing in rates of increase for selling prices for both goods and services." We expect the pound to hold above 1.2400 head of Thursday's key US GDP & PCE data releases.

‍

‍