The Morning Update

The USD starts the week lower, oil prices, equity markets and US yields rises. Market has fully priced in a 25bps rate cut by the Fed on Wednesday and a 60% chance of a 50bps cut. Prior to the Fed’s rate decision,the market will focus on tomorrow’s US Retail Sales data. The funding of the US government is set to expire on September 30^th with no agreement between the parties in sight.

Inother news, another apparent assassination attempt on Trump occurred on Sunday at his Florida golf course. Devastating floods hits Eastern and Central Europe affecting Austria,Romania, Czech Republic and Poland – some area receiving 3 months of rains in 3days. Netanyahu threatens retaliation over Houthis targeting Israel in missile strike.

Incurrency markets. The Asian currencies have all rallied against the USD on the expectation of a higher rate cute. The JPY is up 0.52%, CNY 0.34%, MYR 0.81%. The AUD and NZD followed the same path both rising 0.55%. In the trading currencies MXN (up 0.04%) takes a breather after a 3-day rally while the ZARr allies 0.51%.

Incommodity markets. Oil prices rally 0.51% in the aftermath of Hurricane Francine where crude oil and natural gas output were cut by 20% and 28% respectively. Gold prices hit a record high this morning while silver trades 1% higher in anticipation of a fed rate cut later this week. Copper remains unchanged.Wheats slips (down 1.6%) from a 3-month high while soybean is down 1%

Currentlevel USD Index                          100.632              Down 0.48%

The USD/CAD remains fairly stable despite the overall weake USD. Oil prices have contributed to the weakness of the C$ as well as expectations of further rates cuts from the BoC.

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Currentlevel USDCAD                             1.3576                 Down 0.07

For the third consecutive day the EURCAD moves higher restingat the September highs. Interest rates divergence remains the main driver forthis move higher

Currentlevel EURCAD                              1.5102                 Up 0.39%

EUR strengthen in early trading on the back of the USD weakness. As expected, the ECB cut interest last Friday for the second time in 2024. Comments this morning from ECB policymaker and Slovakian Central Bank Governor said that it would take a significant shift in outlook for the ECB to lower rates in October, with the ECB most likely will wait until December meeting.

Currentlevel EURUSD                              1.1117                 Up 0.38%

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GBPEUR rose this morning, with the upside of the EUR limited after the European Central Bank’s (ECB) interest rate decision last week. The attention will shift to the UK and Eurozone August inflation data on Wednesday ahead of the Bank of England (BoE) interest rate decision.

Currentlevel GBPEUR               1.1865 (.8426)                             Up 0.28%    

The GBP rallies as investors expects the BoE’s policy easing cycle will be less aggressive than the Feds. The market will focus on Wedenesday’s Core CPI and Core PPI’s announcement.

Currentlevel GBPUSD                              1.3197                 Up 0.57%

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