The Morning Update

The USD eased, oil prices are steady, equity markets are down, and US yields rise as markets remain volatile. The dollar has extended its selloff to multi-month lows as speculation grows that the US could coordinate with Japan to support the yen, reinforcing expectations of looser global dollar conditions. The prospect of policy coordination, alongside perceptions of a more tolerant Fed stance, has accelerated selling pressure on the greenback, while boosting the yen and driving safe-haven demand for gold to fresh record highs above $5,000 an ounce. Global equity markets remain under pressure as weakness persists across key regions, with major Asian and European indices slipping amid ongoing risk aversion and geopolitical uncertainty. Indian benchmarks fell amid sustained foreign selling and weak global cues, while broader equity sentiment remains weighed down by uncertainty over trade policy and economic data. Elsewhere, gold surged to fresh record highs as safe-haven demand intensified amid ongoing market uncertainty. Oil prices are steady, while Bitcoin strengthened but stalled below $88,000. In focus this week, Monday sees the US Durable Goods. Tuesday, US ADP Employment Change & EBC President Lagarde Speech. Wednesday, BoC Interest Policy Statement & Fed Interest Rate decision. Thursday, US Initial Jobless Claims & US Factory Orders. Friday will see German GDP, EU GDP, the German CPI report, CAD GDP, and the US PPI report drive the currency markets.

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In the news. Gold rips past $5,000 on fears of global turmoil. Trump faces growing backlash against immigration crackdown after shooting. European IPO markets start 2026 at a record pace, sparking hope of a revival. India to slash car tariffs to 40% in trade deal with the EU. Trump's JPMorgan lawsuit underscores his growing clash with Wall Street. EU opens investigation into X over Grok sexualized imagery, lawmakers say. Americans hunker down, help each other under blizzard and brutal cold. No plans for China free trade deal, Carney says as Trump fixates on Canada. Flights and schools cancelled in GTA as Ontario winter storm wallops region.

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In currency markets. The JPY rallied over 1%, hitting its strongest levels in months amid speculation of potential currency intervention and risk-off flows. This surge, including one of the biggest one-day moves in nearly six months, has helped the yen outperform a softening US dollar and contributed to broader weakness in the greenback. CNY & Asian currencies on average gained 0.2% against the USD. Trading currencies are mixed, with KWD weakening 0.35%, NOK & SEK falling 0.2%, MXN down 0.1%, CHF & CZK up 0.1%. DKK & PLN firmed 0.2%, AUD & NZD gained 0.35%, and JPY rallied 1.2% against the USD.

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In commodity markets. Oil & Copper prices are flat. Natural Gas prices rallied 17.7%. Gold price gained 2.2%. Silver prices strengthened 7.35%. Coffee prices firmed 1.6%. Soybean & Wheat prices up 0.3%.

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CAD holds onto its Friday gains after posting its biggest weekly rise since May, largely driven by broad US dollar weakness and stronger domestic retail sales. Analysts note the move reflects greenback softness more than outright CAD strength, though resilient consumer demand has offered some support. Attention now shifts to Wednesday’s policy decisions from the Bank of Canada and the Federal Reserve, where rates are expected to remain unchanged. Markets will focus on guidance around inflation, labour-market conditions and trade risks to gauge the next move for the loonie. 

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EURCAD is trading higher as euro strength continues to outweigh recent support for the Canadian dollar. The cross is being driven by broad US dollar weakness and firm euro sentiment, while attention now turns to Wednesday’s Bank of Canada interest rate decision, where policymakers are expected to hold rates steady but signal how they view inflation, growth and ongoing trade risks.

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EUR extended gains against the US dollar, with the euro holding below levels last seen on Friday when it touched a four-year high, as the greenback remained under pressure. Dollar weakness has been driven by speculation over potential US–Japan coordination to support the yen and caution ahead of the Federal Reserve’s policy decision on Wednesday. However, the pair struggled to sustain momentum amid a mild risk-off mood and renewed US trade threats, which tempered risk appetite. With limited data due, markets will look to ECB commentary, US durable goods data and the Fed meeting for the next directional cue.

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GBPEUR edged higher in early trading as the pound outperformed on the back of last week’s strong UK retail sales and PMI data, which reinforced signs of improving domestic momentum. The euro was steadier, leaving the cross supported by relative sterling strength, while markets look ahead to upcoming ECB and Bank of England meetings for guidance on the pace of policy easing.

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GBP climbed to a four-month high against a weaker US dollar, supported by last week’s strong UK retail sales and PMI data that pointed to improving economic momentum. Sterling’s gains have been amplified by a broad “sell America” move weighing on the dollar, though markets still expect the Bank of England to keep rates unchanged next week, with easing priced later in the year.