Daily Currency Update

USD - US Dollar

The USD is mixed against major currencies, with the DXY index little changed after retreating from the 105 resistance. Rising commodity prices, especially crude oil, and persistent supply chain issues pose challenges globally, from missile threats in the Red Sea to droughts affecting the Panama Canal. Additionally, the recent earthquake in Taiwan could impact semiconductor supplies, complicating matters for central banks. Markets are reducing expectations for a June Fed rate cut, with current odds slightly above 55% for a 25bps reduction, supporting the USD. Upcoming US economic data includes ADP jobs, final PMIs, and March ISM Services data.

CAD - Canadian Dollar

The CAD is little changed in the upper 1.35 range against a strong USD, unaffected by rising commodity prices. Despite gold hitting a new peak and WTI crude reaching its highest since last October due to tight supplies, CAD's link to these factors is weak. The main drivers for CAD are firm US rates and the overall strength of the USD. However, the surge in commodity prices and Canada's better-than-expected economic performance could offer some support to the CAD, potentially capping losses around the 1.36 level. Canada is set to release Services and Composite PMI data at 9:30ET. Observe USD/CAD trends.

EUR - Euro

CPI for March increased by 0.8% month-on-month, slightly below the expected 0.9%, with annual inflation slowing to 2.4% from February's 2.6%. Core inflation also decreased slightly to 2.9%. ECB signals a possible start to rate cuts in June, supported by slowing inflation. However, growing skepticism about Fed policy and widening rate differentials against the EUR (around -185bps) may keep the EUR under pressure for the time being.

GBP - British Pound

Sterling has seen slight gains from its early week low against the USD, but today's session has been uneventful for the pound. Market movement is minimal as traders await today's US data and comments from central bankers.