The Morning Update

‍

Ahead of the release of key U.S. data — including ADP employment, core PCE inflation, and GDP — the U.S. dollar is trading higher, while oil prices, equities, and Treasury yields are all moving lower. Trump is scheduled to speak at three separate events, any of which could spark market volatility. Trump congratulated Carney on his election victory, with both leaders agreeing to meet in person soon. A U.S. State Department spokesperson said they look forward to discussing key issues, including trade fairness, illegal immigration, fentanyl, and countering Chinese Communist Party influence in the region. While neither Trump nor Xi wants to appear as taking the first step in tariff negotiations, China has reportedly created a 'whitelist' of U.S. products exempt from its 125% tariffs, quietly informing companies as it aims to ease the impact of the trade war.

‍

News Headlines. Iran will hold nuclear talks with Britain, France, and Germany in Rome on Friday to ease tensions ahead of a fourth round of talks with the U.S. over the weekend. China's factory activity contracted at its fastest pace in 16 months in April, a survey showed, reigniting calls for stimulus as Trump’s "Liberation Day" tariffs ended two months of recovery. The data suggests weak domestic demand as factory owners struggle to find new overseas buyers. China's navy patrolled the South China Sea accusing the Philippines of creating "disturbances" as Filipino and U.S. forces conducted a joint mission in the disputed waters. Putin remains open to diplomatic solutions for Ukraine, but progress is slow due to the conflict's complexity, despite ongoing talks with the U.S.

‍

In currency markets. The JPY weakens (0.58%) against the US Dollar as easing US-China trade tensions and Trump's tariff flexibility boost market sentiment. The JPY depreciation is limited ahead of Thursday’s BoJ policy decision, with inflation concerns and a dovish Fed providing support. While the JPY weakened against the USD other currencies are appreciating against the greenback with the THB and MYR up 0.25%, CNY up 0.06%. AUD and NZD are moving in opposite directions today, with the AUD gaining 0.18% while the NZD falls by 0.29%. Emerging market currencies are also diverging, as the MXN rises 0.08%, while the ZAR drops 0.46%.

‍

In commodity markets. Oil prices extended their decline, on track for the largest monthly drop in nearly 3.5 years, as trade tensions and supply concerns dampened demand. Gold dipped (1.63%) as Trump eased auto tariffs and highlighted progress in trade talks, boosting risk sentiment. In agricultural commodities, soybean and lumber both fell by 0.60%, while wheat saw a modest gain of 0.28%.

Current level USD Index                99.386         Up 0.15%

‍

USD/CAD gains support from the Liberal Party’s election win, limiting upside for USD/CAD. Traders await key US data and Canada's GDP release, with caution advised before making bold moves.

Current level USD/CAD                   1.3836            Up 0.03%

‍

EUR/CAD steadies near 1.5800 as trade tensions linger and mixed Canadian jobs data limits CAD gains, while markets await key economic releases.

Current level EUR/CAD                   1.5720           Down 0.18%

‍

EUR/USD dips as Euro weakens on soft preliminary April CPI data from major Eurozone economies, fueling expectations of further ECB rate cuts.

Current level EUR/USD                   1.1366            Down 0.16%

‍

GBP/EUR slips toward 0.8500 as strong German data supports the Euro, while BoE rate cut bets weigh on the Pound.

Current level GBP/EUR       1.1755 (0.8506)         Flat

‍

GBP/USD slips from a three-year high as the US Dollar firms ahead of key economic data, including Q1 GDP. Growth is expected to slow to 0.4% from 2.4%, weighed down by recent Trump-imposed tariffs.

Current level GBP/USD                   1.3361          Down 0.33%

‍