The Morning Update

The USD is steady, oil prices are strengthening, equity markets are down, and US yields are steady on disappointing earnings and growth concerns. The USD holds steady, while commodity currencies slip to multi-week lows on weakening raw material prices. Equity markets came under selling pressure as Tesla and LVMH earnings disappoint, and Deutsche Bank reports its first quarterly loss in four years. "Mixed earnings, alongside softening activity data and high political uncertainty, keep markets on edge," said Cau, head of European equity strategy at Barclays. "Additionally, we are entering the tricky summer seasonality, so investors are turning more defensive in their portfolio." Elsewhere, oil prices strengthened after reports showed US inventories fell for a fourth week. Bitcoin strengthens through $66k, gaining 1%, while Gold and silver prices hold steady. In focus today, CAD BoC Interest Rate Decision, US Composite, Manufacturing and Services PMI, New Home Sales Change, and Fed's Bowman speech will help provide intraday direction to currency markets.

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In other news. The EU moves to ease US fears over a loan of $50 billion in Ukraine. India closes in on China as the largest emerging market. Tesla's profit margins are the worst in five years as price cuts and incentives weigh on the stock price. Deutsche Bank's profit streak ends with a big lawsuit provision. Nato finds gaping holes in defense of Europe. Google parent Alphabet beats Q2 revenue, profit estimates on strong ads, cloud. According to donors, Shapiro, Kelly, and Cooper are frontrunners to be Harris's running may. Jasper National Park evacuations are complete after a massive effort to help thousands flee a wildfire. Netanyahu's visit sparks a wave of protests in DC, with all sides criticizing the Israeli PM.

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In currency news. AUD, NZD, and CAD come under renewed selling pressure as JPY strengthens and base commodity prices remain under selling pressure. INR avoids testing a record low against the USD on suspected RBI intervention. Chinese Yuan hits an 8-month low against the USD on an increasingly bleak economic outlook. CNY slips 0.1%, while Asian currencies are flat on average against the USD. Trading currencies are mixed, with NZD weakening 0.5%, AUD, SEK& MXN slipping 0.3%, CHF, ZAR, & NOK gaining 0.4%, and JPY strengthening 0.55% against the USD.

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In commodity markets. Oil prices rallied 0.9%, Natural Gas prices tumbled by 2.25%, Gold & Silver prices strengthened by 0.3%, Copper prices are up by 0.2%, Wheat prices are flat, and Soybean prices slipped by 1.5%.

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CAD extended its losses to a fresh four-month low against the USD due to expectations of BoC cutting domestic interest rates today and commodity prices continuing under pressure from struggling Chinese economic growth. The Bank of Canada is expected to cut interest rates by 0.25% for a second straight meeting as it aims to steer the economy clear of a recession and avoid an inflation flare-up. Investors will also be monitoring the US PMI data releases, combined with the BoC interest rate decision, and the BoC Governors statement will help drive intraday direction to the loonie.

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EURCAD is steady as investors appear sidelined ahead of the BoC interest rate decision following today's surprisingly weak Eurozone PMI results.

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EUR slips below 1.0850 after disappointing EU and German PMI data. The euro continues to be under pressure against the USD as the eurozone economy continues to struggle, and the prospect of an ECB rate cut in September increases. Domestically, the eurozone July PMI composite index came in at 50.1, below expectations of 50.8 in June and very close to falling into bearish territory below 50. The intraday focus will be on the US PMI data, which will be the primary driver for the Euro direction today; stronger than expected, US PMI results will put selling pressure on the single currency.

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GBPEUR edges higher to 1.1900 on the back of weaker-than-expected eurozone PMI data, while the UK composite PMI beat expectations at 52.7 in July and grew against June's 52.3.

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GBP edges off weekly lows following better-than-expected UK PMI data. The UK PMI data showed that the private sector continued to make positive gains in July, improving domestic risk sentiment and slightly boosting the pound. The stronger PMI suggests renewed hiring trends could also increase wage pressures, increasing inflation concerns, which will concern the BoE. Investors will be focused on the US PMI data to help provide intraday direction to the pound.