Daily Currency Update

USD - US Dollar

The USD is slightly lower overall after retreating from early Asian session highs. Global stocks are down, with notable declines in European markets due to weak banking stocks. Crude oil prices have fallen, unaffected by developments in Iran, and crude volatility is at a five-year low. Bonds are mostly firmer across major markets. Core currencies are marginally up against the USD (less than 0.2%). With little US economic data early this week, attention will focus on upcoming Fed speeches. The USD remains soft, reflecting market repositioning after its spring rally, with limited gains from last week's low and directional risks toward 103.50/104 for the DXY in the coming weeks.

CAD - Canadian Dollar

The CAD is steady in the low 1.36s ahead of key data. April's Canadian CPI is expected to show a slowdown in inflation to 2.7% Y/Y from 2.9% in March. Markets are hoping for positive news on prices, but the expected 0.5% M/M increase and slow core inflation progress may not reduce the 50/50 chance of a June rate cut. A July cut is possible, with September being the most likely. Even slightly higher-than-expected data could boost the CAD, though expectations suggest the near-term CAD trajectory won't change significantly. Observe USD/CAD trends.

EUR - Euro

The EUR is stable in the mid/upper 1.08s, matching estimated fair value, after strong weekly gains. Limited Eurozone data were released today, with March showing a narrower than expected trade surplus (EUR17.3bn). Q1 Labour Costs rose sharply (4.9%, from 3.4%), potentially increasing policymakers' concerns about "second round" inflation effects. A June rate cut is likely, but ECB hawks may urge caution in subsequent months.

GBP - British Pound

Sterling is steady above 1.27 ahead of tomorrow's April CPI data. Markets expect positive news, with prices rising 0.1% in April and headline inflation dropping to 2.1% from 3.2% in March. While core prices and services may stay high, progress on headline inflation could lead to rate cut considerations. A 25bps rate cut is priced in for August, with June chances slightly above 50/50.