The Morning Update

The USD holds steady, oil prices firm, equity markets are up, and US yields are mixed as focus shifts to the Fed minutes today. The U.S. dollar is holding steady against major peers as investors adopt a cautious stance ahead of the Federal Reserve’s minutes from its January meeting. Traders will scrutinize the release for clues on the Fed’s rate path and the degree of confidence policymakers have in inflation cooling, which could set the near-term direction for the greenback. Global equities rallied as dip-buyers stepped in and concerns over AI-driven volatility eased, with S&P 500 futures rising 0.6% and Europe’s Stoxx 600 gaining 0.8%. Improving sentiment and renewed optimism around European stimulus helped drive regional outperformance, reinforcing the broader risk-on tone across markets. Oil and gold prices firmed, supported by steady demand and ongoing geopolitical uncertainty. Bitcoin edged higher but remained capped below $68,000, struggling to build sustained upward momentum. In focus today, the Fed Minutes, US Durable Goods, Building Permits, and Industrial Production will help drive intraday direction in currency markets.

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In the news. Lagarde to leave ECB before the end of her 8-year term. JPMorgan plans branch openings spree as peers bet on in-person banking. Ukraine peace talks end in Geneva after Zelensky says Russia is stalling. The US reveals new details of the alleged Chinese nuclear test. Vatican says it will not participate in Trump's 'Board of Peace.' UK's BAE Systems forecasts years of growth in 'new era' of defence spending, as backlog hits record. 'Exports to China look dismal,' the leader of the busiest US seaport says. BC to cut 15,000 jobs, but spending and debt will still rise. Japan & US reach $36 billion of gas and mineral deals in Trump pact.

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In currency markets. The euro edged lower after reports that ECB President Christine Lagarde may leave her post early, though the impact on near-term policy is expected to be limited. The New Zealand dollar slumped after the RBNZ held rates steady and signalled policy would remain accommodative, while the yen softened as Japan moved ahead with major U.S. investment projects. CNY is flat, while Asian currencies slip 0.1%, on average, against the USD. Trading currencies are mixed, with NZD tumbling 0.7%, JPY weakening 0%.4%, CHF, AUD, SEK, DKK, CZK & PLN eased 0.2%, KWD is flat, while NOK & ZAR gained 0.35% against the USD.

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In commodity markets. Oil, Wheat, & Copper gained 1.2%. Natural Gas prices fell 0.3%. Gold prices firmed 0.6%. Silver prices rallied 2.9%. Coffee prices up 0.4%, and Soybean prices advanced 0.75%.

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CAD remains volatile, rebounding from yesterday's 11-day low near 1.3692 against the U.S. dollar as softer-than-expected inflation reinforced expectations of a Bank of Canada rate cut. Annual inflation slowed to 2.3% in January, below forecasts, prompting a pullback in Canadian yields and weighing on the loonie, which then pared some losses. Broader U.S. dollar strength and volatility in the commodity markets also contributed to the loonie’s choppy price action.

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EURCAD slipped as concerns around ECB leadership and broader policy uncertainty weighed on the euro. At the same time, firmer commodity prices supported the Canadian dollar, helping the loonie gain ground against the single currency.

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EUR remains pressured below the 1.1850 level as renewed U.S. dollar demand and reports that ECB President Christine Lagarde may step down early weigh on the common currency. While the broader policy impact appears limited, the pair stays on the back foot ahead of the release of the Federal Reserve’s January meeting minutes. Traders will look to the FOMC minutes for further clarity on the Fed’s rate path, though markets are largely pricing in a hold in March.

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GBPEUR holds firm above 1.1450, supported by steady UK inflation data and renewed pressure on the euro following reports that ECB President Christine Lagarde may step down early. While UK CPI slowed to 3.0% in line with expectations, ECB leadership uncertainty continues to weigh on the single currency.

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GBP edges slightly higher in early European trading, with the pound holding above the 1.3550 level following the UK inflation release. January CPI eased as expected, reinforcing bets for a March Bank of England rate cut, though sterling found modest support after recent labour market-driven losses. Focus now shifts to upcoming U.S. data and the FOMC minutes for the next directional cue.