The Morning Update

Ahead of the CPI figures the USD if off, oil prices move higher, equities slightly higher while, treasury yields trade lower. The USD retraces from its recent 2-year high as the market digest the softer than expected PPI released yesterday. Despite the PPI reading yesterday, market expectation is that the FED will not cut rate later this month.

In other news. Hamas has accepted a draft agreement for a ceasefire in the Gaza Strip and the release of dozens of hostages. Israeli officials said progress has been made, but details are being finalized. Advisers to President-elect Donald Trump now concede that the Ukraine war will take months or even longer to resolve. Russia launches new missile barrage at Ukraine, targets gas infrastructure.

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In currency markets. The USD/JPY fell sharply (-0.79%) after BoJ Ueda’s kept the possibility of an interest rate hike on the table in next week’s policy meeting. South Korea’s impeached President Yoon detained in major law enforcement operation. As we await the US CPI figures later this morning, the USD is flat against the CNY and THB while losing ground against the MYR (-0.10%). Trading currencies are a stronger against the greenback with the ZAR up 0.26% and the MXN up 0.05%.

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In commodity markets. Oil prices continue its move higher (0.25%) this morning and a 6% increase in the last 5 trading days. Gold (0.40%) and silver (0.68%) are both trading higher this morning. Copper follows suits with gains of 0.1%. Agricultural commodities are mixed this morning with Wheat off 0.42% and Soybean up 0.23%.

Current level USD Index                           109.04             Down 0.17%

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The USD/CAD stabilizes after 2-days of weakness. The recent weakness is attributed to an improved outlook for foreign currency inflows, reduced US trade concerns, and hawkish expectations from the BoC.

Current level USDCAD                              1.4348                Down 0.05%

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The EUR/CAD is trading within a narrow range this morning after yesterday’s rebound. For the time being the currency pair seems to be trading within the 1.4700-1.4850 range. No economic figures set to be released this week for both Canada and the Eurozone.

Current level EUR/CAD                               1.4783                 Down 0.05%

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The EUR/USD remains stable this morning despite Eurozone Industrial Production lower than expected reading and continued dovish comments from ECB officials. The latest coming from Villeroy de Galhau where he noted that it made sense for interest rates to reach 2% by the summer.

Current level EUR/USD                               1.0302                 Down 0.06%

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The GBP/EUR remains weak this morning after the UK CPI figures which came in lower than expected. Additionally, the concerns about the UK's fiscal sustainability and rising bond yields might continue to undermine the GBP.

Current level GBP/EUR               1.1860 (.8432)     Up 0.11%    

The GBP/USD trades higher this morning after the softer than expected UK CPI figures. While these inflation numbers are fuelling expectation of future BoE rate cuts; they also should ease pressure on UK bonds yield.

Current level GBP/USD                               1.2226                 Up 0.12%

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