The Morning Update

The USD and oil prices trade higher as we start the week, equity markets hedge lower while bond yield rises. Election polls that show rising odds of former President Donald Trump winning the Nov. 5 election are boosting the dollar, since his proposed tariff and tax policies are seen as likely to keep U.S. interest rates high and undermine currencies of trading partners. With no important US economic data, the focus will remain on the US elections.

In other news. Lebanese were surveying the damage after overnight Israeli strikes hit nearly a dozen branches of a Hezbollah-run financial institution. The strikes came after U.S. Defense Secretary Lloyd Austin called civilian casualties in Lebanon “far too high” in the Israel-Hezbollah war, and urged Israel to scale back some strikes, especially in and around Beirut. Ukraine launches more than 100 drones in large-scale attack on western Russia. Zelensky calls for 'strong response' from allies to North Korean involvement in Ukraine war.

In currency markets. China's yuan held steady against the U.S. dollar, after the country cut its benchmark lending rates as expected. Australia, NZ dollars edge up after three straight weeks of declines. The INR declined to its weakest closing level on record. The ZAR slipped against a stronger dollar, as investor focus shifts towards local inflation figures due later this week. The USD gained 0.16% against the CNY, 0.28% against the JPY, over 1% against the THB, 0.35% against both the AUD and NZD. The Greenback also gained against the trading currencies rising 0.12% against the ZAR and 0.47% against the MXN.

In commodity markets. Oil prices is up 1.75% to start the week after losing nearly 7% last week. Gold hits fresh high in record-setting rally amid global uncertainties. Silver follows suits reaching level not seen since 2012. On the agricultural side, Wheat rallied 0.6% after last Friday’s sharp 3% fall while soybean trades 0.7% higher.

Current level USD Index                           103.599             Up 0.10%

The USD/CAD remains strong as the BoC is set to announce their interest rate decision on Wednesday. Decreasing price pressures, combined with a notable decline in labor growth and household spending, have fueled expectations of a 50-bps cut.

Current level USDCAD                              1.3819                 Up 0.16%

The EURCAD remains volatile as it trades between 1.4900 and 1.5100 reacting to any news that could affect either central banks interest rate decision.

Current level EURCAD                               1.4992                 Down 0.02%

The EUR struggles to keep any gains against the USD as the Eurozone’s economic growth is expected to remain sluggish.

Current level EURUSD                               1.0845                 Down 0.18%

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The GBPEUR could benefit from the dovish sentiment surrounding the ECB’s next move. German PPI fell by 1.4%, while Eurozone’s inflation rate of 1.7% is below the ECB’s target of 2%.

Current level GBPEUR               1.2000 (.8333)                             Up 0.04%    

The GBP remains under pressure as market reassess the BoE future actions after the release of a strong UK retail sales.

Current level GBPUSD                               1.3021                 Down 0.21%

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