The Morning Update

The USD moves higher, oil prices lose some ground while equity markets, and US yields are trading higher. Mixed U.S. data showed resilient services activity but easing labor momentum, with markets now focused on jobless claims, job openings, and upcoming inflation signals. Global stocks slipped as AI-driven tech fears lingered, even as Europe steadied ahead of central bank meetings and metals volatility deepened.

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News Headlines. The New START treaty, which took effect on February 5, 2011, has now expired, leaving the U.S. and Russia without limits on strategic nuclear arsenals and raising fears of a renewed arms race. Xi told Trump Taiwan is the most critical issue in U.S.–China ties, urging caution on arms sales while both sides struck a positive tone on relations. Ukraine and Russia resumed U.S.-brokered talks in Abu Dhabi, with both sides citing positive progress toward ending the war. South Korea said it will deepen cooperation with China to secure rare earth supplies, unveiling measures to strengthen supply chain resilience.

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In currency markets. Asian markets saw broad currency weakness against the U.S. dollar on Feb. 5 as risk-off sentiment weighed on the markets alongside Asian stock selloffs, with the JPY (-0.25%) and other regional currencies under pressure. AUD/USD and NZD/USD faced the same headwind. High-yielding currencies also weakened, with the ZAR sliding 0.46% and the MXN down 0.17% against the greenback. Bitcoin is down nearly 10% this month as a stronger U.S. dollar, scaled-back Fed rate-cut expectations, post-rally profit-taking, and softer risk sentiment from tech and AI sell-offs weighed on prices.

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In commodity markets. WTI crude fell over 1% as Iran–U.S. talks eased fears of supply disruptions. Commodities slumped as easing U.S.–China and Iran tensions and a firmer dollar drained risk premiums, with gold off 2% and silver plunging 15%. In the agricultural, commodities soybeans and wheat buck the trend up 1% and 0.42% while lumber trades 1.0% lower.

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USD/CAD rose as a firmer dollar and falling oil prices weighed on the Canadian dollar amid cautious Fed rate-cut expectations.

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EUR/CAD remained supported near recent highs as the Canadian dollar stayed pressured by weaker oil prices and cautious risk sentiment, while markets awaited key North American labour data for fresh direction.

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EUR/USD trades near the 1.1800 ahead of the ECB’s policy decision, where rates are expected to remain unchanged, followed by President Lagarde’s press conference.

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GBP/EUR slipped as the pound softened ahead of the BoE, despite mixed euro area data with strong German industry but weak consumption.

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GBP/USD traded cautiously as the BoE is expected to hold rates at 3.75%, with markets watching the minutes for clues on the timing of further easing.

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