The Morning Update

The USD trades sideways, oil prices are up, equities and Treasury yields trades marginally higher. With the markets partially closed yesterday in Honor of President Carter and today’s release of the US employment figures, the markets are quiet. Nonfarm payrolls is expected to grow by 160K after last month’s rise of 227K and US unemployment rate is expected to remain steady at 4.2%, any significant deviation from this could create some volatility in the market. The USD presently trades near a 2-year high. President-elect Trump is expected to declare a national economic emergency after his inauguration which could lead the way to increase tariffs against their trading partner.

‍

In other news. The U.S. House of Representatives voted on Thursday to sanction the International Criminal Court to protest its issuing arrest warrants for Israeli Prime Minister Benjamin Netanyahu and his former defense minister over Israel's campaign in Gaza. Zelenskyy and U.S. Defense Secretary Lloyd Austin used their final meeting Thursday to press the incoming Trump administration not to give up on Kyiv’s fight. Russia says it welcomes Trump's readiness to solve problems through dialogue.

‍

In currency markets. China's central bank is expected to deploy this year its most aggressive monetary tactics in a decade as it tries to stimulate the economy and soften the blow of impending U.S. tariff hikes. The issue that the PBOC faces is that a cut in interest rate may not lead to increase lending but rather create a financial bubble. As the market awaits the US employment figures, the USD continues to appreciate against the CNY (0.05%), the JPY (0.05%), THB (0.12%) while the MYR bucks the trend by rising 0.15%. Trading currencies are mixed, with the MXN strengthening 0.2% and ZAR weakening 0.35% against the greenback.

‍

In commodity markets. Oil prices continue its move higher rising 2.7%. Gold and Silver are also trading higher, 0.46% and 1.1% respectively. Copper is following suit adding 0.67%. Agricultural are moving in tandem with precious and base metal, with Wheat rising 0.11%, Soybean up 0.71%

Current level USD Index                           109.15             Unchanged

‍

The USD/CAD is quiet at the start of the day as we await the release of the release of both countries’ employment figures. Fed signaling rate cut caution coupled with the threat of Trump’s tariffs are weighing on the CAD.

Current level USDCAD                              1.4409                Up 0.05%

‍

The EURCAD rebounds after a 4-day sell off bouncing off the 1.4800 level. The currency pairs next movement will be determined by each currency’s reaction to the release of the US employment figures.

Current level EURCAD                               1.4847                 Up 0.20%

‍

The EUR/USD trades cautiously around the 1.03 level as investors await the release of the US employment figures which is a key metric used by the Fed to determine interest rates policy. ECB policymakers are comfortable with firm dovish bets as inflationary pressures in the Eurozone are broadly under control.

Current level EURUSD                               1.0304                 Up 0.09%

‍

The GBPEUR continues to face some pressure against the EUR after UK borrowing costs hit their highest for 16 years. The driving force of the increase in UK borrowing cost is the rise in 10-year UK treasury bonds which are at level not seen since 2008.

Current level GBPEUR               1.1937 (.8377)                    Down 0.05%    

The GBP remains under pressure has increase borrowing costs could force the Chancellor of the Exchequer to cut spending and raise taxes. On a short-term basis, the market will focus on today’s US employment figures.

Current level GBPUSD                               1.2295                 Down 0.02%

‍