The USD edges higher, oil prices are steady, equity markets are up, and US yields rise amid trade & rate uncertainty. Currency markets steady ahead of the ECB announcements, and TSMC 's profit beat helped equity markets claw back losses. The Nasdaq 100 futures edge higher in early trading after suffering its worst day since 2022 on concerns the US could impose stricter curbs on firms that supply China with advanced semiconductor technology, but the tech sector received a boost from results from TSMC restoring confidence in the industry. The ECB rate decision will be in focus today, with markets expecting rates to remain unchanged and the ECB President Lagarde setting the stage for a September rate cut. Elsewhere, oil prices hold steady despite the larger-than-expected drop in US crude stocks. Bitcoin edges higher towards $65k, while gold prices firm and silver prices rally over 1%. In focus today is the ECB Interest Rate Decision, US Initial Jobless Claims, Philadelphia Fed Manufacturing Survey, and speeches from Fed's Daly and Logan will help provide intraday direction to currency markets.
In other news.TSMC hikes revenue outlook to reflect heated AI demand. President Biden faces intensified calls to step aside while ill with Covid. Ukraine resarts bondholder talks on $20 billion debt overhaul. France's hung parliament faces the first test with the President's vote. Von der Leyen makes pitch for a second term as Brussels chief. Trump running mate JD Vance vows to fight for 'forgotten' workers. UK's Starmer uses the European forum to press for an EU reset and Ukraine support. Nokia reports a 32% drop in profit but sees recovery in 2nd half. Officials call for action to build Toronto's flood resiliency after Tuesday's massive storm.
In currency markets. The GBP dips on wage data, the Euro slips ahead of the ECB interest rate decision, and the USD bounces off two-month lows. CNY is flat, while Asian currencies slip by 0.1% on average against the USD. Trading currencies are mixed, with NOK, SEK, JPY & MXN down 0.2%, NZD, ZAR & CHF slipping 0.1%, and AUD firming 0.1% against the USD.
In commodity markets. Oil, Natural Gas, & Wheat prices are flat. Gold prices firmed by 0.35%. Silver prices rallied by 1.25%. Copper prices weakened by 1.12%. Soybean prices eased by 0.4%.
CAD remains at the weaker end of its recent range against its G10 peers as investors remain cautious ahead of the Bank of Canada's interest rate decision on July 24th. Money markets are pricing in an almost 90% chance that the Bank of Canada will cut interest rates for a second straight meeting, following data showing Canada's inflation rate eased to 2.7% in June. Domestically, the employment insurance beneficiaries change release is not expected to impact Loonie, with investors waiting for CAD Retail Sales on Friday. We expect the loonie to be capped near 1.3635.
EURCAD slips off 8-month highs as investors brace for today's ECB interest rate decision.
EUR remains capped at 1.0950, heading into today's ECB rate policy announcement. The Euro is consolidating near a four-month high against the USD as investors wait on the sidelines ahead of the ECB interest rate decision. The ECB is widely expected to leave the monetary policy settings unchanged. Still, the expectation is that the ECB President will set the stage for an interest rate cut in September. If Lagarde takes a hawkish tone, saying that the ECB reiterates the data-dependent approach, voicing inflation concerns, we could see the Euro extend its strengthening against its G10 peers.
GBPEUR slips further in early trading following the slight decline in wage growth, which will be a positive sign for the Bank of England.
GBP slips below 1.3000 following signs of easing wage pressures. The pound slips in early trading but remains on track for a fourth weekly gain against the USD. Domestically, UK average earnings held steady at 5.7%, and UK employment held at 4.4%, but the claimant count change increased to 32.3k vs. the expected 23.4k. The easing of wage growth will be seen as a positive sign for the BoE, but it is unlikely to change the prospect that UK interest rates will remain on hold at its August 1st meeting. Intraday, we anticipate the pound will hold a narrow trading range ahead of Friday's UK Retail Sales report.
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