The Morning Update

The USD eases, oil prices firm, equity markets are down, and US yields fall as markets turn cautious ahead of key data. The USD eases ahead of today's US jobs and growth data while the AUD rebounds despite the RBA's dovish outlook. Equity markets turned cautious ahead of US tech corporate earnings, the UK budget, and several key economic reports. In Europe, France, Spain & Germany, economies grew more than expected, providing support to the Euro. Elsewhere, oil prices steadied after two days of decline on the prospect of a further easing of hostilities in the Mideast. Bitcoin eases back to $72.5k, silver is steady, and gold strengthens in early trading. Investors will be focused on earnings from Meta Platforms & Microsoft, as well as US GDP, US ADP Employment Change, and the UK Budget to help provide intraday direction to the currency markets. ,

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In other news. Union flag strike risk unless VW rules out plant closures. German economy unexpectedly grows, avoiding recession. Spain flash floods kill at least 51 people in Valencia region. Moldova heads for presidential runoff that could open the door to closer Russia ties. Ukraine and Russia are in talks about halting strikes on energy plants. The EU drives through tariffs on Chinese electric vehicles. Amit Shah, an Indian minister accused by Canada, is Modi's closest aide. The UK borrowing costs hit post-election high on even of Reeves' first Budget. Eurozone growth beats forecasts, but the outlook remains muted.

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In currency markets. Euro firms in early trading on positive eurozone growth data, while the pound eases ahead of the UK budget. The USD eases heading into the critical US Jobs & growth data. CNY & Asian currencies, on average, firm by 0.1% against the USD. Trading currencies improved, with SEK flat, CHF, NOK & MXN up 0.1%, AUD, NZD & JPY firmed by 0.3%, and ZAR strengthened by 0.45% against the USD.

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In commodity markets. Oil and gold prices strengthened by 0.55%. Natural Gas prices are up by 0.1%. Silver & Copper prices eased by 0.1%. Wheat prices weakened by 0.3%, and Soybean prices firmed by 0.3%.

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CAD continues under pressure, holding near the 12-week lows of 1.3929 amid Liberal leadership uncertainty, oil price weakness, and ongoing expectations of widening interest divergence between the BoC and Fed. Intraday, Investors will be focused on the US GDP & Jobs data if we see stronger-than-expected results that could cause the Fed to pause its easing policy. Markets will continue to monitor Bloc Quebecois's efforts to force a confidence vote against PM Trudeau's government.

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EURCAD continues to advance, recouping October losses as Canadian political uncertainty and expectations of diverging interest rates between the ECB & BoC continue to pressure the loonie.

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EUR tests 1.0850 amid a softer USD and upbeat eurozone growth data. Euro edges higher after the eurozone, Germany, France, and Spain beat estimates. German GDP had been expected to be negative, pushing the German economy into recession, so the positive growth for Germany helped the Euro rebound. We expect investors to be steady ahead of today's critical US Growth and Jobs data.

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GBPEUR weakens on the combination of caution ahead of the UK budget and the better-than-expected eurozone growth data.

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GBP eases in early trading as investors are sidelined ahead of the UK Autumn budget. The pound slipped below 1.3000 as investors remain cautious heading into Labour's first budget in 14 years, which is widely expected to be unpopular with billions in tax rises and spending cuts expected. We expect the pound to hold within its current trading range until we see the results from the UK budget and the US Jobs & Growth reports to provide direction to the pound.