The Morning Update

The markets are starting the day on a quieter note, with the USD slightly lower, oil prices stable, and both equities and bond yields trading higher. Uncertainty keeps the USD under pressure, as global trade involves complex, long-term supply chains that can't be quickly adjusted, which may explain why Trump may allow temporary exceptions to auto tariffs, giving carmakers time to shift production to the US. Trump faces pressure to ease his trade war with China as economic risks grow. With Xi Jinping refusing to engage after steep U.S. tariffs, Trump continues to tout a “great relationship” while struggling to restart talks. Trump accused Xi of touring Southeast Asia to “screw” the US, after slapping Beijing with major tariffs. Xi, meanwhile, urged Vietnam to resist U.S. “unilateral bullying” during his regional visit.

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News Headlines. The Trump administration is freezing $2bn in funds for Harvard after it rejected White House demands to combat antisemitism. The move is part of Trump’s broader push to pressure elite universities. Trump blamed Ukrainian President Zelensky for starting the war with Russia, a day after a major Russian attack killed 35 and injured 117 in Ukraine saying you don't start a war against someone 20 times your size and hope people give you some missiles. The U.S. deployed B-1B bombers over the Korean Peninsula in joint drills with South Korea, aiming to boost deterrence and respond to North Korea’s growing nuclear and missile threats.

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In currency markets. The JPY strengthen (0.24%) supported by concerns over the US-China trade war, optimism for a US-Japan deal, and expectations of BoJ rate hikes. The AUD rose for a fifth day against the USD (+0.50%) after Trump exempted key tech products from tariffs, boosting risk sentiment. RBA minutes showed uncertainty around the timing of the next rate move, with no decision set for May. The NZD followed suit rising 0.50% while the Asian currencies are mixed with the CNY dropping 0.15%, THB rising 0.20% and the MYR flat. In the emerging markets, the ZAR lost 0.06% and while the MXN gained 0.13% against the USD.

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In commodity markets. Oil prices are trading lower (0.64%) as OPEC lowering demand forecasts. Strong Chinese imports were offset by a 1.5% YoY decline, while OPEC cut 2025 and 2026 growth estimates by 150k b/d due to tariff concerns. Gold remains strong (+0.34%), trading near its all-time high as investors fear the US-China trade war's economic impact. Expectations of rate cuts by the Fed in 2025 and a weaker USD support gold, though optimism over Trump's tariff reprieve limits further gains. Agricultural commodities are mixed with soybean and wheat down 0.71 and 0.32% respectively and lumber up 0.80%.

Current level USD Index                99.681         Up 0.04%

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USD/CAD is trading a little lower ahead of the release of Canadian CPI. Market expectation is expected to show a steady inflation rate. Once the release of these numbers are digested, the market will sure switch their focus on tariffs,

Current level USD/CAD                   1.3853            Down 0.16%

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EUR/CAD continues to remain volatile as it bounces between 1.5400 and 1.5900.

Current level EUR/CAD                   1.5707            Down 0.25%

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EUR/USD is consolidating near 1.1350 after recent gains, with the USD under pressure due to shifting tariff announcements from Trump, including a suspension of auto tariffs to support domestic manufacturers.

Current level EUR/USD                   1.1344            Down 0.04%

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GBP/EUR rate rises today, driven by stronger-than-expected UK job growth, though easing wage growth and upcoming Bank of England rate cuts may limit further gains, while the euro remains supported by ECB policies.

Current level GBP/EUR       1.1675 (0.8567)         Up 0.47%

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GBP/USD rises after strong UK labor data showing a 206K increase in jobs, above expectations. However, mixed wage growth and upcoming higher social security contributions may slow hiring. Market focus now shifts to March CPI data for insights into the Bank of England's rate cut outlook.

Current level GBP/USD                   1.3185          Up 0.80%

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