The Morning Update

The USD firms, oil prices are steady, equity markets are down, and US yields have risen amid widespread IT outages. The USD edges higher and is set to rebound for a weekly gain as the cyber outage unsettles investors. Global equity markets continue under pressure with more pullback in tech stocks amid the global IT outages following the disruptions across Microsoft's online services. CrowdStrike shares tumbled 20%, while Microsoft shares weakened 2.5% after CrowdStrike was hit with a major outage caused by an issue with an update affecting its Falcon Sensor product. Microsoft Cloud services were restored after the outage, the company said. Beyond the IT outage, Thursday saw the US's biggest jobless claims since May, increasing market speculation that the Fed will cut interest rates in September. Oil prices gave up early gains following worries about the impact of the global IT outages. Bitcoin prices held steady, while gold and silver prices tumbled as investor sentiment waned. Today's focus is CAD Retail Sales, Fed's William & Bostic speeches, and with no high-tier US economic releases, we anticipate currency markets will be sidelined following the global IT issue.

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In other news. The Microsoft outage hit companies around the world. Trump pledges tax cuts, trade wars, and border crackdowns. Yemen's Houthis claim drone attack on Tel Aviv. Russian prosecutors request an 18-year sentence for WSJ reporter Evan Gershkovich. Top Democratic donors and operatives say Biden is near exit. Chinese officials call for 'proactive' stimulus to distribute growth across the economy. Canada's finance minister is upbeat on the economy amid Carney reports.

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In currency markets. GBP Slips after the weaker-than-expected UK retail sales data. The Chinese yuan is set to end the week lower, the Taiwan dollar falls to an 8-year low, and the USD edges higher on IT outage concerns. CNY and Asian currencies, on average, ease by 0.1% against the USD. Trading currencies are under pressure, with SEK tumbling 0.9%, NZD & ZAR weakening 0.5%, AUD, NOK & CHF falling 0.25%. JPY is down 0.1%, and MXN is flat against the USD.

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In commodity markets. Oil prices slipped by 0.1%, Natural Gas & Gold prices weakening 1.5%, Silver prices tumbled by 2.7%, Copper prices dipped by 0.3%, Wheat prices firmed by 0.5%, and Soybean prices gained 0.4%.

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CAD is at two-week lows amid global uncertainty amid the global IT outages and expectations of a BoC interest rate cut at next week's interest rate decision. Markets are pricing at a 90% chance of a 25 basis points rate cut on the 24th of July, following Tuesday's CPI data, which shows that annual inflation levels dropped to 2.7% in June. Today, without any US economic data, the focus will be on CAD Retail Sales ex-autos, which are expected to weaken to -0.5% in May vs. 1.8% in April, which will add to support for a BoC rate cut.

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EURCAD holds steady with investors sidelined amid the global IT outages; month-to-date, the Euro has gained 1.8% against the Loonie and we anticipate we could see a break of 1.5000 into the BoC meeting next week.

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EUR breaks through 1.0900 amid increasing risk-off sentiment supporting the USD. Investors remain on the sidelines as CrowdStrike deploys a fix for the global tech outages. CrowdStrike CEO assures markets that it was not a 'cyberattack.' The ECB kept interest rates on hold on Thursday, with the ECB President taking a slightly dovish tone, leaving markets expecting a nearly 98% probability that the ECB will lower interest rates by 0.25% at its 18 September meeting. We expect markets to remain sidelined with the lack of crucial US high-tier economic data and the ongoing IT outages.

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GBPEUR extends its weekly downward trend following disappointing UK Retail Sales data, which came in below expectations.

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GBP slips to a weekly low of 1.2900 following the disappointing UK Retail sales and a strengthening USD. The UK Retail Sales m/m in June fell -1.2%, below forecasted -.4%, and Mays +2.9%, which increased speculation that the BoE may have room to cut interest rates as early as September. Markets will follow the US Fed's Bostic and Williams comments before the Fed blackout starts on Saturday. We remain bullish on the GBP into Q4 with the prospect of a Trump victory, and two Fed rate cuts will put selling pressure on the USD. Intraday, we expect the pound to find support at 1.2900, with investors expected to remain on the sidelines.