Daily Currency Update

USD - US Dollar

This morning, the USD is showing relative stability as markets react positively to a weekend without further escalation between Iran and Israel, boosting equities and other risk assets. The USD Index (DXY) is under slight selling pressure, with traders anticipating it might revert to previous levels around 104.00-105.00 ahead of key economic reports this week, including the US GDP on Thursday and the PCE on Friday. These reports are expected to influence the USD's short-term trajectory.

CAD - Canadian Dollar

The CAD is extending its gains against the USD for the fourth consecutive session, trading around 1.3720 amid a subdued USD. Despite higher US Treasury yields, the CAD's rally may be tempered by recent signals from Bank of Canada officials suggesting a shift towards a wait-and-see monetary policy. Moreover, the lack of new escalations in the Middle East is also supporting the CAD's strength. Observe USD/CAD trends.

EUR - Euro

The EUR is holding steady in a tight range, showing a slight increase in early trading at approximately 1.0660. A decrease in geopolitical tensions has reduced the demand for the safe-haven USD, providing a slight lift to the EUR. However, the general outlook for the EUR remains bearish, influenced by the expected divergence in interest rate trajectories between the US and Europe.

GBP - British Pound

The GBP is facing downward pressure, trading close to five-month lows at around 1.2360, as market expectations favor an earlier interest rate cut by the Bank of England (BoE) compared to the Federal Reserve. Recent comments from BoE Deputy Governor Dave Ramsden have strengthened the view that inflation pressures in the UK are diminishing, potentially enabling the BoE to begin reducing rates earlier than previously expected. This view is further intensified by the UK's lackluster economic growth prospects, especially in contrast to the more robust economic resilience observed in the US.