The Morning Update

Wednesday May 8th, 2024

Written by:
Bernard Gauvin

The USD continues its move higher, equity markets are flat, oil prices are hedging lower while treasury yields aremoving higher. The USD recouped some of the losses stemming from renewed betson Fed rate cuts this year. Investors are now focussed on the pace and timingof a Fed rate cut. Fed’s Kashkari said that stalled inflation buoyed partiallyby the housing market mean that the FED may need to hold rates steady in 2024.


In other news.  US paused shipment of bombs to Israel over concerns over the Rafah offensive. Israel said it would send a delegation to Cairo to assess Hamas’ position which official said was far from meeting Israeli demands.  On the day where Ukraine celebrates the defeat of Nazi Germany, Russia launched a drone attack across the Ukraine on energy facilities. Responding to Macron’s comments, Russia said it would target French troops if sent to Ukraine.


In currency news. BOJ official reiterates their concern of the negative impact of the weakened JPY and hint that the relentless decline could lead to rate hike. The CNY eased against the dollar after hawkish comments by a Fed official and the weaker guidance from China's central bank. The USD has gained against the CNY (0.10%), the JPY (0.43%), AUD (0.44%)and NZD (0.20%) in early morning trading. The trading currencies are facing the same fate with the ZAR down 0.44% and the MXN 0.13%.


In commodity markets. Oil hedges lower (down 1.43%) as data shows a pile-up in crude and fuel inventory in the US – a sign of weak demand. Gold, silver and copper prices are down 0.15%, 0.36% and 2.0 % respectively in this morning trading. As for the agricultural commodities, wheat continue its move higher (0.19%) on the back of demand while soybean fell 0.38% as market participant took advantage of the recent run-up. 


Current level USD Index               105.574           Up 0.15%


The USD/CAD rallied as Fed official continues to issue hawkish comments some suggesting that rates should remain unchanged for an extended period. The sell-off of oil prices also contributed to the CAD weakness.


Current level USD/CAD               1.3746            Up 0.16%


The EUR/CAD moved higher as the C$ remains under pressure trading near its 2024 highs.  


Current level EUR/CAD                1.4781           Up 0.16%

EUR/USD is off slightly in early trading on the back of Fed officials’ recent hawkish comments and little in the form of US economic data on the horizon.


Current level EUR/USD                1.0749           Down 0.03%


GBP/EUR continues to slide as the currency pairs nears 1-month lows. While the move that started in late April has been significant, it is still in the middle of the 2024 range.


Current level GBP/EUR     1.1614 (0.8606)        Down 0.10%


GBP/USD is facing multiple headwinds this morning, such a sharp USD recovery and uncertainty ahead of Thursday BoE’sinterest rate decision.


Current level GBP/USD                1.2489           Down 0.10%



Other ccy levels vs C$. GBPCAD 1.7172 AUDCAD .9028  CADCHF.6608 CADJPY 112.75  CADTHB 26.87 CADCNY 5.2545  CADNOK 7.9437 CADSEK 7.9200 CADDKK 5.0453  CADZAR13.5205


Other ccy levels vs USD. JPY 155.36 CHF.9083  AUD.6567 NZD .5988  CNY 7.2254  MXN 16.905  INR83.4978  PLN 4.0060 CZK 23.71 ZAR 18.5878  ILS 3.7085  AED 3.6729 KWD 0.30751


Other Major X levels. EURCHF.9769 EURJPY 167.07  EURSEK 11.7089 EURNOK 11.7442 GBPCHF 1.1347 EURAUD 1.6372  GBPAUD 1.9018 AUDCHF.5966  AUDJPY 102.03 CHFJPY 170.95