The USD eased, oil prices fell, equity markets were down, and US yields were mixed, as caution returned to markets. The USD index eased, while G10 currencies advanced cautiously as investors await Thursday's key US data and Fed Chair comments. US futures are mixed, while European equities are down as investors appear cautious that equity markets may have run their course and are turning their attention to the longer-term effects of the US trade reset. "Investors got very bearish in April, missed the market rebound and then were forced to chase it," said Chovin, head of asset allocation at Coutts & Co. With focus shifting to the impact of tariffs, he's using the rebound to take some profit and reduce his equities overweight. Elsewhere, oil prices ease on the potential of a jump in US crude inventories, while gold, silver and Bitcoin all ease in early trading. With the lack of any high-tier US economic releases today, investors will be focused on comments from BoE, ECB & Fed policymakers to help provide direction to currency markets.
In the news. President Trump meets Syrian president after pledge to lift sanctions. Bank of England's Mann says UK labour market more resilient than thought. Burberry to cut about 20% of global workforce in turnaround drive. HIV patient testing falls in South Africa after US aid cuts. Trump's Middle East visit opens floodgates of AI deals led by Nvidia. "Bulldog" ex-Goldman banker answers Carney's call to fix Canada's resources sector. China criticizes the UK's trade deal with the US.
In currency markets. The USD eased in early trading, while ECB's Nagel said a stronger USD is still needed. We expect currency markets to remain cautious ahead of Thursday's April US Retail Sales, PPI , USD eases in early trading, while ECB's Nagel says a stronger USD is still needed. We expect currency markets to remain sidelined ahead of Thursday's April US Retail Sales, PPI and a speech from Fed Chair Powell. CNY is flat, while Asian currencies gain by 0.4% on average against the USD. Trading currencies advanced, with NOK, ZAR, & DKK up 0.15%, CHF firmed 0.35%, NZD & SEK strengthened 0.6%, and AUD & JPY rallied 0.8%
In commodity markets. Oil prices weakened by 1.35%. Natural Gas prices tumbled 1.75%. Gold & Silver prices eased 0.4%. Copper prices fell by 0.6%. Wheat prices are down 0.25%, while Soybean prices firmed by 0.25%.
CAD advances on a softening USD and investor optimism following the announcement of the new Liberal cabinet. PM Carney's selection of Tim Hodgson as the natural resources minister highlighted to markets that he was serious about building resources in Canada. The Loonie has benefited from the US/China trade pact, and the focus will be on Canada to secure its trade pact with the US. Intraday will see the release of the CAD Building Permits for March, but expect investors to be sidelined ahead of key US inflation report releases on Thursday.
EURCAD strengthens as weakening commodity prices add pressure to the loonie.
EUR picks up momentum amid a weakening USD, retest 1.125 in early trading. The euro advanced on the back of the weakening USD amid US inflation concerns and easing risk sentiment. Domestically, the German and Spanish Harmonized Index of Consumer Prices came in as expected at 2.2%. ECB Nagel today underlined the USD's role as a reserve currency for the global systems that were needed, but he said that he expected the euro to play the same role over the next few years. Intraday, investors will be monitoring a flurry of central bank speakers today, but the main focus will be on Thursday's US Fed Chair Greenspan's speech and US Retail Sales & PMI to provide guidance.
GBPEUR underperforms against the single currency, with the euro boosted by the static German inflation levels.
GBP advances amid the softer USD, seeing the pound retest 1.3350. The Pound capitalizes on renewed selling pressure on the greenback as risk-on sentiment fades. Domestically, BoE policymaker Catherine Mann said today that the UK labour market has been made more resilient than expected and added that increasing inflation expectations are worrying. Mann's comments helped provide additional support to the pound. With the lack of any high-tier US economic releases today, markets are expected to steady ahead of tomorrow's key US inflation and UK GDP reports.
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