The Morning Update

The USD steadies, oil prices slip, global equities are down, and US yields rise as focus shifts to Jackson Hole. The USD recoups some recent losses, supported by yesterday’s firmer-than-expected U.S. inflation data, which reinforced expectations that rates could remain restrictive through year-end. Attention now shifts to weekly jobless claims today and, more importantly, Fed Chair Kevin Warsh’s Jackson Hole speech on Friday for further guidance on the U.S. rate outlook.Global equity markets are mostly lower, although U.S. technology futures outperform after Nvidia’s upbeat outlook reinforced confidence in continued AI spending. Broader sentiment remains cautious as elevated bond yields and uncertainty ahead of Fed Chair Kevin Warsh’s Jackson Hole speech tomorrow weigh on risk appetite. Elsewhere, oil prices remain under pressure as progress in Iran-Oman talks raises hopes of increased shipping through the Strait of Hormuz, while gold prices slip modestly. Bitcoin rallies back above $80,000, supported by continued demand for alternative assets amid concerns over U.S. debt and dollar debasement. In focus today: Markets will be watching U.S. initial jobless claims and the ECB’s July meeting minutes, while the Federal Reserve’s Jackson Hole symposium also gets underway, with the events expected to provide fresh direction for currency markets.

‍

News headlines. Nvidia jumps 7% after blockbuster earnings boost AI confidence. Qatari PM heads to Iran to 'de-escalate tensions' as tanker attack tests Trump's Hormuz claim. Harvard Business School explored European outpost after Trump's visa threats. France replaces Italy as the European bond investors' biggest worry. EU states revive plan to use frozen Russian assets for Ukraine. Nearly 1,500 missing in Nepal floods as death toll rises. Greer suggests the US needs to consider bans on Canadian goods.Trump's top trade negotiator disputes Canadian assertion that the US made last minute demands.

‍

In currency markets. Against the USD, G10 currencies are largely sidelined as markets await fresh signals from Jackson Hole, with the dollar holding near an eight-day high after firmer U.S. inflation data nudged Fed rate-hike expectations higher. The Mexican peso has weakened more noticeably as the stronger dollar combines with renewed Fed tightening expectations and lingering North American trade uncertainty, although it remains close to recent multi-year highs

‍

In commodity markets. WTI +0.10% | Nat Gas +1.20% | Gold -0.44% | Silver +0.15% | Copper -0.93% | Palladium -1.09% | Coffee -3.69% | Cocoa +3.86% | Soybeans -0.55% | Wheat +0.10%

‍

CAD remains under pressure, testing weekly lows as escalating Canada-U.S. trade tensions and weaker oil prices weigh on the loonie. Reciprocal tariffs have revived concerns over Canadian exports, investment and business confidence, while expectations for relatively firm economic growth provide some underlying support. Focus now turns to Fed Chair Kevin Warsh’s Jackson Hole speech and Friday’s Canadian GDP report for further direction.

‍

EURCAD holds steady in early trading, with pressure on the loonie from escalating Canada-U.S. trade tensions and softer oil prices offset by the euro’s modest retreat. Expectations for an ECB rate hike provide underlying support to the cross, while markets remain cautious ahead of Fed Chair Kevin Warsh’s Jackson Hole speech tomorrow.

‍

EUR retreats toward 1.1650 as firmer-than-expected U.S. headline PCE inflation supports the USD and reinforces expectations that Fed policy will remain restrictive. Better German data and expectations for an ECB rate hike are providing some underlying support, with focus now on today’s ECB minutes and Fed Chair Kevin Warsh’s Jackson Hole speech tomorrow.

‍

GBPEUR holds steady above 1.1650, with GBP supported by resilient UK growth and expectations for a potential BoE rate hike, while stronger recent German data and expectations for ECB tightening underpin the euro. With few fresh domestic catalysts, the cross remains rangebound ahead of Fed Chair Kevin Warsh’s Jackson Hole speech tomorrow.

‍

GBP extends its decline below 1.3600 as firmer U.S. inflation reinforces expectations for another Fed rate hike and supports the USD. Softer BoE rate expectations are also reducing yield support for GBP. The UK economy has shown some resilience, but a cooling labour market and weaker business sentiment are raising questions over the durability of growth. Attention now turns firmly to Fed Chair Kevin Warsh’s Jackson Hole speech tomorrow.