Daily Currency Update

USD - US Dollar

The USD has slightly increased after declining in early Asian trade, but the overall market sentiment suggests a high level of risk aversion. In Europe, stocks are weaker and US futures have declined by 0.4% for the session. Bank stocks in Europe are not performing well as investors are shifting their attention to the regional bank situation in the US. First Republic shares have sharply dropped by more than 20% in pre-trading due to an "unprecedented deposit" flight and the bank withdrawing guidance last night. European bank stocks have decreased by about 2.5% on the day, indicating another volatile day for the sector. The prices of crude oil and iron ore are also down. It remains to be seen if the bank's concerns can significantly boost the USD, as the gains have been slight. The market will likely perceive a broader problem across the bank sector as an obstacle to the tight Fed policy. There is more data available today, including the Apr Philly and Richmond Feds' manufacturing surveys, housing data, and the Conference Board's Consumer Confidence measure. However, economic news is unlikely to have a significant impact, and primary focus will be on stocks

CAD - Canadian Dollar

As risk appetite decreases and investors steer clear of commodity FX, the CAD is facing struggles once again. The CAD is being negatively impacted by spreads and falling commodity prices. However, the USD appears to be overvalued, which may hinder its gains in the upper 1.35s, at least in the short term. Since there is no domestic data scheduled, the CAD's performance will be significantly influenced by risk sentiment, financial flows, and technical indicators. Observe the USD/CAD trends.

EUR - Euro

As risk aversion increased, the EUR retreated slightly from its overnight highs in the upper 1.10s. A second peak in the same range might be worrying for EUR bulls. However, the ECB's hawkish stance, which is keeping its options open for the May 4th policy decision, and the market's prediction of more than 25bps of tightening this morning, suggest that any dips in the EUR should be well-supported at the moment.

GBP - British Pound

The GBP briefly rose above 1.25 during overnight trading before settling back to trade at around the same level during the session. Despite the recent dip in stocks, the pound has not been grouped with the "riskier" currencies, implying that investors view it differently. Look for the pound to be driven by broader market themes on the day.