The Morning Update

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The USD is down slightly, oil prices are up, while equities and bond yields are trending lower. This morning, the USD is weaker, impacted by economic concerns and trade policy uncertainties, with the dollar index down about 6% from January's peak. Key U.S. data this week includes retail sales, housing starts, Fed rate decision, jobless claims, and existing home sales.

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News Headlines. U.S. and Russian officials are discussing peace plans for the war in Ukraine, with Russia seeking guarantees that NATO will exclude Ukraine from membership. Trump mentioned significant progress over the weekend and hopes to end the war. Discussions are already underway on dividing certain assets between Russia and Ukraine. The U.S. launched a "decisive and powerful" wave of airstrikes on Houthi targets Saturday to halt attacks on Red Sea shipping. North Korea vowed on Monday to "steadily update and strengthen" its nuclear arsenal, rejecting the G7 Foreign Ministers' joint statement urging Pyongyang to abandon its nuclear ambitions. Canada's new Prime Minister Mark Carney chose Europe, not the U.S., for his first foreign trip to Paris and London, seeking solid support from allies.

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In currency markets. The JPY is weaker against major currencies, influenced by positive market sentiment and expectations for the Bank of Japan's policy meeting later this week. The Yen's performance will be shaped by the BoJ's decision and the Federal Reserve's actions. Other Asian currencies are mixed today: the CNY is flat, the MYR and THB are up 0.05% and 0.07%, respectively, while the IDR is down 0.42% against the USD. Both the AUD and NZD gained around 0.45% against the dollar.

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In commodity markets. Oil prices extended gains (1%) this morning, supported by China's new measures to boost consumption and rising geopolitical tensions in the Middle East, including Houthi attacks on U.S. Navy vessels in the Red Sea. Gold is struggling to gain significant momentum, trading just below its all-time peak near $3,000, as trade tensions and geopolitical risks support its safe-haven appeal. Natural gas prices surged (2%) due to renewed geopolitical tensions and supply concerns, with fears of shipping disruptions. Agricultural are all trending higher this morning, with wheat up 2.3%, Soybean up 0.2% and lumber up 4.9%.

Current level USD Index                103.685          Down 0.05%

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USD/CAD is trading slightly lower this morning as the market absorbs the rise in oil prices, with ongoing tariff discussions continuing to be a key driver for the currency pair.

Current level USD/CAD                   1.4356            Down 0.12%

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EUR/CAD remains volatile, having surged from 1.5000 to 1.5850 since the start of March, reflecting fluctuations driven by economic data, oil price movements, and broader market sentiment.

Current level EUR/CAD                   1.5650            Up 0.03%

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EUR/USD is consolidating as investors await the Fed's interest rate decision on Wednesday. The Fed is expected to keep rates steady, with the USD outlook shaped by the Fed’s dot plot and economic projections.

Current level EUR/USD                   1.0945            Up 0.23%

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GBP/EUR remains stable around 1.1880, as the Pound is pressured by the Euro's strength following Germany’s debt reform deal. The proposal, including increased state spending, could support the Euro further if approved in Tuesday's parliamentary vote.

Current level GBP/EUR       1.1888 (0.8412)         Down 0.03%

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GBP/USD is trading around 1.2950 as investors await the Fed and BoE's monetary policy decisions later this week. Both central banks are expected to keep rates steady, with the Fed likely maintaining its current range of 4.25%-4.50%.

Current level GBP/USD                   1.2970          Up 0.29%

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