The USD trades lower, equity markets are mixed, oil and US yields are flat. The USD extends its losses for the second straight day. Flight to quality trades unwind as talk of a ceasefire in the Israel-Hamas war circulates. Powell’s tempered expectations of a rate cut and stressed the significance of closely monitoring inflation as it approaches the 2% core target. Continued focus on US treasury yield are also a contributing factor for the pressure the USD is facing.
In other news. Hamas has proposed a ceasefire plan that would quiet the guns in Gaza for four-and-a-half months, during which all hostages would go free, Israel would withdraw its troops from the Gaza Strip and an agreement to end the war. Putin granted an interview with Tucker Carlson which is set to be aired Thursday.
In currency news. China's yuan held steady on Wednesday against the dollar amid signals authorities were strengthening their resolve to support slumping share markets. China has replaced the head of its securities regulator as policymakers struggle to stabilise the country's main stock indexes after its recent plunge. The CNY is down 0.05%, JPY down 0.15%, MYR is up 0.08%, TWD is down 0.31%, The AUD is down 0.15% while the NZD is up 0.1%, The trading currencies the MXN and the ZAR hedging lower 0.09% and 0.41% respectively.
In commodity markets. Turkey’s Erdogan and Putin to discuss the return of the Black Sea Grain Initiative that ensured the safe export of Ukrainian grain. Oil is presently trading up 0.59%, Nat Gas is flat, Both Gold and silver are trading lower 0.13% and 0.69% respectively while copper is down 0.05%. Agricultural commodities moving lower with Wheat trading 0.16% while soybean 1.1%.
USD/CAD drifts lower for the second straight day pressured by an uptick in oil prices, hawkish Fed expectation and Macklem’s comment that more time was needed for monetary policy to ease price pressure.
The EUR/CAD has remained in a tight range since the end of January’s sell-off.
EUR/USD hedged higher as it recovers from a near 3-month low. The general USD weakness, the prospect of a cease fire in the Israel-Hamas war and hawkish comments by ECB’s Schnabel have all contributed is strengthening the EUR.
The GBP/EUR continues its move higher as it’s nearing last September’s high. The soft Eurozone data are solidifying the views of a rate cuts. While the UK’s economy is improving and the recession risk and needs for an early BoE rate cuts fade.
The GBP to rebound from a near 3-month low as market participants are taking a risk on position as talk of an Israel-Hamas cease fire hit the news wire.
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