The Morning Update

The USD slips, oil prices are stable, equity markets are lower, and US yields are declining as risk sentiment wanes. The USD is under pressure holding near four-month lows in early trading, while the safe-haven CHF and JPY strengthen as tariff worries increasingly sap investor risk sentiment. Global equities have weakened, and US futures are down in early trading after the S&P 500’s worst week since September, as the health of the US economy weighs on investors’ risk appetite. Fed’s Daly stated that growing uncertainty among businesses could slow demand in the US economy but does not necessitate a change in interest rates. Fed Chair Powell also acknowledged a rise in uncertainty for the US economy on Friday. Elsewhere, Bitcoin has fallen nearly 6.5% as volatility continues around Trump’s crypto reserve fund, while oil prices remain steady near September lows amid global concerns. In focus this week, Monday sees no key economic releases, while Tuesday features US Jolts Job Openings. On Wednesday, there will be the ECB Lagarde Speech, US CPI, and CAD BoC Interest Rate Decision.Thursday brings US Initial Jobless Claims and US PPI. On Friday, the German Inflation report, UK GDP, Industrial & Manufacturing Production, UK CPI, and the US Michigan Consumer Sentiment Index will help guide currency markets.

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In the news. Mark Carney wins the race to replace Trudeau asCanada’s PM. North Korea hackers cash out hundreds of millions from $1.5bn ByBit hack. Germany can spend almost Euro 2tn without harming growth, economists say. Ukraine seeks to persuade US to resume aid in high-stakes talks. China hits US farm goods with tariffs as trade war escalates. Romania bans far-right frontrunner from presidential election. China says it will grow relations with Canada on basis of mutual respect. Airport strike all but freeze German air travel on Monday. Shareholder pushes Seven & i to engage with Couche-Tard. Canada's Mitel Networks files for bankruptcy after debt workouts.

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In currency markets. CHF & JPY strengthen against its G10 peers investors favour the safe haven currencies due to lingering worries over tariffs and a US economic slowdown. Euro continues to strengthen while China dependant AUD & NZD weaken after Beijing increases tariffs against the US. CNY weakens by 0.4%, while Asian currencies on average slip by 0.1% against the USD. Trading currencies are mixed with NZD tumbling 0.7%, ZAR, SEK & AUD weakened by 0.45%, MXN is flat, CHF gains by 0.2%, and JPY rallying 0.6% against the USD.

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In commodity markets. Oil & Gold prices up 0.1%. Natural Gas prices rallied by 4.3%. Silver prices firmed by 0.7%. Copper prices weakened by 0.5%. Wheat prices strengthened by 1.3%, while Soybean prices eased by 0.35%.

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CAD slips in early trading amid ongoing tariff uncertainties, expectations of a federal election, and the prospect of a BoC interest rate cut on Wednesday. China announced retaliatory tariffs on certain Canadian farm and food imports after Canada imposed tariffs on Chinese-made electric vehicles as well as steel and aluminum products in October. Carney garnered 86% of the liberal vote, becoming the PM-designate and is anticipated to call an election before Parliament is scheduled to reconvene on March 24^th. On Wednesday, economists expect the BoC to lower its lending rate by 25bps, bringing rates down to 2.75%. We still expect the loonie to remain on the back foot against the USD and its G10 peers in Q2/25.

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EURCAD continues to rally, testing fresh four year highs as Canada continues to battle weak oil prices, tariff and political uncertainties, as well as the prospect of another BoC interest rate cut.

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EUR stabilizes above 1.0850 after Eurozone data. The euro continues to receive support from the German debt overhaul strategy and benefits from an improved Eurozone Sentix Investor confidence reading for March, which was-2.9, an increase from February’s -12.7. We anticipate that investors will remain cautious ahead of Wednesday’s US inflation report and ECB President Lagarde’s speech following Friday’s disappointing US NFP report.

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GBPEUR holds steady in early trading with investors focused on Ukraine peace talks, and growing risk-off sentiment.

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GBP ticks higher amid a softer USD, as risk sentiment wanes due to increasing Sino-U.S. trade tensions. The pound remains above 1.2900 amid a weaker USD and a lack of significant U.S. economic releases. Investors will focus on the Bank of England’s quarterly bulletin for Q1/25, but the primary attention will be on Wednesday’s U.S. inflation report for guidance from the Fed. Fed Chair Powell noted that uncertainty surrounding the Trump administration's policies could hinder the Fed's ability to make policy adjustments. Intraday, we expect the pound to maintain its current trading range, with investors looking ahead to UK data releases on Friday.

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