The Morning Update

The US$ weakens, oil prices steady, equity markets are down, while US yields rise as US big-tech earnings buoyed market sentiment. US$ weakens as safe-haven buying unwinds, European equity markets are down amid disappointing earnings, while US stock futures rise as big tech earning led by Alphabet & Microsoft beat market expectations on the top & bottom line in Q1/23. "The markets are very focused on some of the earnings story, but possibly overlooking the weight of economic deceleration that is playing through right now, particularly in the US" John Woods Credit Suisse. Today focus will be on the key US Durable Goods & Nondefense Capital Goods Orders ex Aircraft and more corporate earnings to help provide intraday direction to currency markets.

‍

In other news. IEA global EV outlook shows 10m EV cars were sold in 2022 globally and expects 1 in 5 cars sold in 2023 will be EV. EU agriculture minister criticizes Poland for banning Ukrainian grain imports. Wheat farmers ask Canada to step in as the federal workers strike threatens exports. US Treasury Secretary Yellen warns raise the debt ceiling or face economic catastrophe. German consumer morale picks up on income expectations-GfK. UK warns China secrecy over military expansion risks 'tragic miscalculation'. Russian President Putin signs decree taking over Russian assets of two foreign firms.

‍

In currency markets. The US$ gives up Tuesday's gains as big-tech earnings helped restore some risk confidence in markets. SEK weakens after its central bank turns less hawkish on interest rates. Argentina vows to battle peso slide towards 500 vs US$ in the black market. Euro & GBP rebound while commodity currencies gains remain contained. CNY is up 0.1%, while Asian currencies firm 0.3% on average vs US$. Trading currencies remain mixed with AUD & SEK down 0.3%, NZD & ZAR ease 0.1% while MXN & JPY firms 0.2%, CHF gains 0.3%, NOK strengthens 0.5% vs US$.

‍

Oil prices stabilize as markets balance falling US inventories against ongoing global economic slowdown concerns. C$ holds near 1-month lows as investors continue to favor the EUR and US$ with their hawkish central bank stance, weaker commodity prices and the prospect that if the federal workers strike continues it could have an impact on Canadian GDP. Focus will be on the release of BoC monetary policy decision on April 12th, where BoC left rates on pause at 15-year high of 4.5%. Support holds at 1.3565 while resistance remains at 1.3670.

‍

EURCAD rallies testing 2-year highs as the C$ remains under selling pressure as weaker commodity prices, a less hawkish BoC and increasing concerns of the impact of the Federal services strike continues to keep the loonie under pressure. Year-to-date C$ has weakened almost 4%, in the last six months the C$ has weakened 10% vs Euro. Support rises to 1.4970 while resistance rises to 1.5100.

‍

EUR retest 1.1050 amid a weaker US$ and improved confidence after better-than-expected US big-tech earnings. Euro rebounded after posting its biggest daily loss in 6-weeks on Tuesday after risk-sentiment returns on big-tech earnings. Domestically Consumer Confidence survey in Germany beat expectations and improved significantly vs April's report. Intraday focus will be on more US earnings and key US GDP report to help provide intraday direction to currency markets. Support holds at 1.0970 while resistance remains at 1.1100

‍

GBPEUR weakens towards 6-week lows, down almost 1% in April as investors favor the Euro heading into next weeks ECB rate decision. Support holds at 1.1230 while resistance sits at 1.1350.

‍

GBP recovers losses from Tuesdays sell off as risk-sentiment improves. A boost from big-tech earnings help calm markets and reverse of US$ safe-haven buying on Tuesday. Intraday the UK has no key driving economic releases so focus will be on today's US Durable goods data and Thursday's US GDP report, followed by May 4th Fed rate decision to provide the pound direction. Support holds at 1.2400 while resistance remains at 1.2525.

‍