The Morning Update

The USD softened, oil prices fell, while equities and US yields showed mixed results as risk sentiment improved with news of upcoming Ukraine peace talks. The USD eased further, and the Euro gained strength as risk sentiment improved following reports that Trump and Putin are gearing up for peace discussions on Ukraine. Equity markets are mixed as investors await more earnings reports, inflation data, and further developments in the Ukraine peace process."Ending the conflict could eliminate war-related costs, especially in energy, mitigate uncertainty, and potentially enhance business confidence and investment – which are vital for Europe’s largest economies,” stated SusanaCruz at Panmure Liberum. Meanwhile, oil prices continued to decline, based on speculation that Russian supply risks might lessen, impacting energy stocks. Bitcoin weakened 1% to $96.2k, while Gold and Silver gained in early trading. Today's focus will be on the US PPI ex-food & energy y/y Jan and US initial jobless claims to help provide intraday direction to currency markets.

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News Headlines. Trump, Putin prepare to begin Ukraine peace talks as Europe pleads for unity. Return to pre-2014 Ukraine borders 'unrealistic', says US defence secretary. Hamas says it will continue releasing Israeli hostages. Thyssenkrupp warns US tariffs could prompt flood of cheap Chinese steel to Europe. The UK economy unexpectedly grew by 0.1% in Q4/24. Europe stocks hit fresh record high on earnings and Ukraine peace hopes. Barclays shares sink 5% as Q4 profit hike and 2025 guidance fail to impress. Premiers, finance minister call tariff talks with the White House officials 'constructive'. Large snowstorm impacting southern Ontario.

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In currency markets. The USD gives back weekly gains, while Euro strengthens on Ukraine peace talk hopes, and the GBP strengthens after data shows surprise growth in the UK. CNY strengthened by 0.2%, while Asian currencies were flat on average against the USD. Trading currencies are mixed, with AUD & MXN weakened by 0.2%, NOK & NZD flat, ZAR, JPY, & SEK gained by 0.2% and CHF rallied by 0.7% against the USD.

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In commodity markets. Oil prices tumbled by 1.25%. Natural Gas prices rallied by 3.45%. Gold prices gained by 0.55%. Silver & Copper prices firmed by 0.3%. Wheat prices strengthened by 1%, and Soybean prices up by 0.15%.

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CAD steadied near two-month highs as improving risk sentiment on Ukraine peace hopes put pressure on the USD. However, tumbling oil prices and the ongoing threat of tariffs continue to cap the Loonies’ short-term gains. Intraday, the US PPI inflation report and jobs data will help guide the loonie.

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EURCAD extended gains, up 0.7% in February and 2.5% year over year. Analysts forecast the Euro to retest 1.5055 on hopes for Ukraine peace talks. However, the threat of a US/Canada trade war will continue to pressure on the loonie.

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EUR surges above 1.0400 following German data and a positive shift in risk sentiment. The euro gained support from recent news about the Ukraine/Russia peace talks following a conversation between Trump and Putin. However, the euro’s strength may be short-lived; according to CNBC, Trump could unveil his reciprocal tariff plan as early as tomorrow. Focus today will be on the US PPI and jobs data to help drive the intraday direction for the single currency.

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GBPEUR got a boots after the UK GDP Q4/24 posted a surprise gain of 0.1%.

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GBP gains momentum but struggles to surpass 1.2500, despite improved risk sentiment and growth data. The pound moved up from Wednesday's low, buoyed by stronger-than-expected UK GDP growth and a weakening USD in light of news regarding peace talks in Ukraine. The UK's Gross Domestic Product expanded at an annual rate of 1.4% in Q4, after a 1% increase in Q3/24. Intraday US data releases will drive direction for the pound.

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