The Morning Update

The USD eases, oil prices rally, equity markets are mixed, and US yields ease ahead of the US CPI report. The USD eases against its G7 peers, with the USD hitting its lowest level against the JPY in 2024 as the FX markets show more signs of risk aversion. Equity markets are mixed, with the UK FTSE down on weak domestic growth data. In contrast, global equities remain cautious ahead of today's US inflation report and Thursday's ECB and BoE interest rate decisions. Elsewhere, the market response to Tuesday's presidential debate appears limited, but the threat of more tariffs is shaping into one of the more significant market risks. Oil prices rally, breaking a five-day losing streak, following the slide in US inventory levels and hurricane concerns. Markets will be focused on the US Consumer Price Index to provide intraday direction to currency markets.

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In other news. Sources say that Samsung Electric plans global job cuts of up to 30% in some divisions. Harris puts Trump on the defensive in a combative debate. The US government demands an overhaul of Israeli conduct in the West Bank after the killing of a US citizen. The UK economy stagnates unexpectedly, creating a growth challenge for the new government. UniCredit buys Commerzbank stake from Germany, rekindling takeover speculation. Blinken arrives in Ukraine to show support for Kyiv. Mexico's Senate approves radical plan to elect all judges. Melanie Joly says Canada will block US-bound ammunition sales destined for Israel.

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In currency news. The USD comes under renewed selling pressure, while G7 currencies hold steady ahead of today's US inflation report. CNY is up 0.1%, while Asian currencies gain by 0.2% on average against the USD. NZD eased by 0.1%, AUD & CHF & SEK firms by 0.1%, NOK & ZAR strengthened by 0.4%, and JPY & MXN rallied by 0.6% against the USD.

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In commodity news, Bitcoin tumbled 2.1%, Oil rallied by 2.6%, Natural Gas & Gold prices up by 0.4%, Silver prices strengthened by 1.6%, Wheat prices flat, and Soybean & Copper prices firmed by 1%.

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CAD edges off a nearly three-week low as oil prices rebound, and the USD weakens heading into today's US inflation report. Domestically, BoC Governor Macklem said in a speech on Tuesday that with globalization slowing, the cost of global goods might not decline to the same degree, which could put upward pressure on inflation. The governor did leave the door open to larger interest rate cuts if growth falls short of expectations, with markets anticipating at least a further 75 bps cut by the bank in 2024. Intraday, the US inflation report will be today's primary driver for the currency market.

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EURCAD holds steady with investors sidelined ahead of today's US inflation report and tomorrow's ECB interest rate decision.

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EUR remains steady below 1.1050, with investors sidelined by dovish expectations for the ECB on Thursday. The euro held steady on the back of a weakening USD heading into today's US inflation report. Recent reports indicated a growing division among ECB policymakers regarding the growth outlook, which could impact further decisions. Policymakers are mixed on inflation concerns vs. concerns over an EU recession. Analysts anticipate a 63% probability of a 25 bps cut by the ECB tomorrow.

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GBPEUR weakened following the UK GDP report, which showed a second month of zero growth for the UK.

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GBP falls below 1.3100 after a second month of disappointing economic growth data. A disappointing slew of UK economic data put pressure on the pound as the UK economy continued to stagnate. Industrial Production weakened by -1.2%, and Manufacturing Production slumped by -1.3 %, all coming in weaker than expected. The focus will be on tomorrow's BoE Governor comments to see if today's flurry of disappointing data will impact the short-term direction of UK interest rates. Intraday, the US CPI report will be the primary driver for the pound.