The Morning Update

The USD edges higher, oil prices weaken, equity markets are mixed, and US yields are steady with focus on US-Iran talks. The US dollar edges higher as investors position ahead of key US jobs data that could shape Federal Reserve rate expectations. Firmer Treasury yields and reduced bets on near-term rate cuts are lending support to the greenback. Meanwhile, broader fiscal concerns linger after global debt surged to a record $348 trillion in 2025, underscoring the longer-term backdrop of elevated sovereign borrowing. Global equities are pausing, with US futures lower and European and Asian markets mixed after Nvidia’s earnings failed to spark a fresh leg higher in tech stocks. While results topped expectations, cautious outlook commentary has kept AI-related enthusiasm in check. Ongoing trade uncertainty and rising US-Iran tensions are also restraining broader risk appetite. Elsewhere, bitcoin has retreated from recent highs, slipping back toward the $68,000 level as risk appetite softens and investors trim exposure amid broader macro uncertainty. Weaker sentiment, including ETF outflows and geopolitical and trade-related headwinds, has also weighed on oil and gold prices, reflecting a more cautious tone across markets. Focus today will be on the ongoing US/Iran talks, the US Initial Jobless Claims, and CAD Current Account Q$ to help direct currency markets.

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In the news. The US warns Iran over ballistic missiles as pair meet for talks. The IMF urges the US to change course on economic policy. Nvidia's blockbuster results fail to dazzle investors. HK court overturns China critic Jimmy Lai's fraud conviction in rare legal victory. India & Canada to sign 'immense' range of deals during Carney visit. CIBC earnings top estimates on record revenue across divisions. Cuba says those killed in a US boat encounter planned an uprising. Canada's finance minister says the US is unlikely to lift tariffs. Canada and South Korea sign a defence agreement.

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In currency markets. Against the US dollar, the Japanese yen firms while China’s yuan extends its recent gains, supported by improved risk sentiment and currency-specific flows. Meanwhile, the Swiss franc weakens as safe-haven demand eases and investors rotate toward higher-yielding assets. CNY advances 0.4%, while Asian currencies slip 0.1% on average, against the USD. Trading currencies are mixed, with SEK, NOK, ZAR, PLN & CHF weakened 0.3%, NZD, DKK & CZK eased 0.2%, MXN & AUD are flat, and JPY firmed 0.15% against the USD.

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In commodity markets. Oil prices decreases 1.3%. Natural Gas prices weakens 2.5%, Gold prices eased 0.8%. Silver prices tumbles 4.5%. Coffee prices fell 1%. Soybean & Wheat prices firmed 0.25%.

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CAD is flat in early trading as investors await today’s Q4 current account data alongside Friday’s key GDP release, where growth is expected to come in broadly flat. A wider-than-expected current account deficit could weigh on the loonie by highlighting external imbalances, while a narrower gap may offer modest support. With trade negotiations, tariff uncertainty and US PPI data also in focus, near-term direction remains closely tied to incoming macro signals and broader risk sentiment.

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EURCAD holds steady around 1.6150 as the cross consolidates amid limited fresh catalysts. Canada’s Q4 current account data, showing a wider-than-expected deficit, is weighing modestly on the loonie, though broader trade uncertainty and mixed eurozone signals are keeping price action range-bound for now.

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EUR continues to trade around the 1.1800 level as the US dollar stabilizes following its recent tariff-driven decline, limiting further upside for the pair. While ECB President Lagarde reiterated that inflation is progressing toward the target and emphasized policy patience, her comments on the continuity and stability of her mandate did little to energize euro bulls. With Fed policy still seen as data-dependent and US jobless claims and Fed speakers ahead, near-term direction remains largely a dollar-driven story.

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GBPEUR is edging lower, with sterling facing headwinds from UK political uncertainty ahead of the Gorton and Denton by-election, where a potential Labour defeat could trigger a temporary sell-off in the pound. While firmer UK growth data and slightly reduced expectations for a near-term BoE rate cut have offered some support, political risk and lingering policy uncertainty are keeping sterling’s upside against the euro constrained.

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GBP is sidelined, with the pound slipping back below 1.3550 as the US dollar holds steady amid cautious positioning ahead of US-Iran nuclear talks and lingering trade uncertainty. While sterling remains relatively resilient, softer UK labour data, expectations for a March BoE rate cut and political risk surrounding the upcoming by-election are limiting further upside against the greenback.