The Morning Update

The USD is steady, oil prices firmed, equity markets are down, US yields rise on rates, and Trump picks. The USD holds steady as US yields tested 4.5% for the first time since May following Friday's stronger US Retail Sales data, which supported the prospect of fewer rate cuts by the Feds. Equity markets remain under pressure with the prospect of a more hawkish Fed following the Trump victory, which is anticipated to increase inflationary pressures. "It should be a quieter week as the recent relentless wave of US macro and political news flow in theory slows down," said Reid, Deutsche Bank's global head of macro and thematic research. "The main story on this front being on potential political appointments for the new Trump administration with Treasury secretary the one creating most interest." Elsewhere, oil prices rebounded, Bitcoin recovered, rallying over 2%, and Gold prices advanced after suffering its worst weekly drop since 2021. With the absence of any high-tier data releases, markets will be focused on ECB & Fed speakers and Trump administration picks to help drive intraday direction.

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In other news. Tesla stock pops 8% in premarket after report Trump wants to relax US self-driving rules. Biden allows Ukraine to use US arms to strike inside Russia. US no-frills pioneer Spirit Airlines files for bankruptcy protection. The ECB split over a report showing big EU bank's capital requirements lower than US rivals. Hizbollah's chief spokesperson was killed in an Israeli strike on Beirut. Canada Post, union gear up for renewed bargaining with the special mediator. The G20 summit confronts a global order unsettled by Trump's return. Price hikes offer the chance for Guinness rivals as Diageo pushes zero alcohol brew.

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In currency markets. The JPY comes under renewed pressure on a cautious BoJ. The GBP bounces off six-month lows, while the euro steadies as the USD pauses ahead of Fed & ECB speakers. CNY eased by 0.15%, while Asian currencies weakened by 0.3% on average against the USD. Trading currencies come under pressure, with JPY & MXN weakened by 0.5%, NZD, NOK & SEK eased by 0.35%, AUD slipped by 0.1%, CHF up 0.1%, and ZAR strengthened by 0.5% against USD.

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In commodity markets. Oil & Wheat prices firmed by 0.7%. Natural Gas prices rallied by 2.8%. Gold & Silver prices strengthened by 1.2%. Copper prices are up by 0.6%, and Silver prices weakened by 0.4%.

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CAD steadies after testing a four 1/2-year low on Friday after the stronger-than-expected US Retail Sales eased the prospect of further short-term Fed easing. The widening gap between the US & Canadian yields is expected to keep the pressure on the loonie. A break of 1.4115 (May 13th, 2020) opens up the potential to test 1.4198 (April 2024) next. Intraday sees low-tier CAD housing starts, which is not expected to impact the loonie, with investors focused on Feds Goolsbee comments.

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EURCAD is sidelined due to the lack of high-tier economic data releases today.

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EUR holds steady, with investors cautious to start the week. The Euro holds steady despite the prospect of diverging ECB-FED policy outlooks following the election of Trump and stronger-than-expected US economic data. Markets will be focused on ECB President Lagarde's and Chicago Fed President Goolsbee's speeches today to help provide direction for the single currency. A break of 1.0500 opens up the prospect of a move to 1.0288 (Nov 2022) next.

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GBPEUR edges highs in quiet trading as a less dovish-BoE provides minor support for the pound.

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GBP holds above 1.2600 in a quiet start to trading. The pound holds steady in subdued trading with the absence of any US or UK high-tier economic releases today. Investors will be focused on Tuesday's BoE Monetary Policy Report and Wednesday's UK inflation report, which is expected to show inflation rise to 2.2% from 1.7% in September. Technically, a break of 1.2600 could open up further weakness for the pound towards 1.2443 (9th May 2024) next.