The week started on a bullish note in Europe and the US, as Joe Biden’s decision to leave the presidential race did not impact market sentiment. The S&P 500 rebounded 1% following its worst week since April, driven by a Big Tech selloff and rising concerns that a second term for Donald Trump in the White House would worsen global trade relations. The Nasdaq 100 gained more than 1.5%, with the "Magnificent 7" climbing 2.5%, led by nearly a 5% jump in Nvidia and more than a 5% jump in Tesla.

The US 2-year yield consolidated near the 4.50% level, the 10-year yield was close to 4.20%, and the US dollar index remained near its 200-day moving average. USD weakness was countered by higher expectations of rate cuts from other major central banks. There are no major data releases today. Tomorrow, we have the Bank of Canada's rate decision.

EUR/USD is trading flat today. Dovish comments from ECB officials are not attracting buyers to the Euro. On Monday, ECB policymaker Peter Kazimir stated that the market pricing of two rate cuts by the end of 2024 was not "entirely misplaced." Meanwhile, Vice President Luis de Guindos said on Tuesday that recent inflation data from the Euro area were in line with their projections. The macroeconomic calendar remains scarce, with first-tier US figures scheduled for later in the week, contributing to the quietness.

GBP/USD is holding firm today after registering gains yesterday. Investors have fully priced in an interest rate cut by the Federal Reserve at the September policy meeting, which keeps US Treasury bond yields depressed. This, in turn, prompts some USD selling and acts as a tailwind for the GBP/USD pair. Additionally, the diminishing odds of an interest rate cut by the Bank of England in August offer some support to the currency pair.

USD/CAD is staying firm to start the session. The recent slump in crude oil prices, to over a one-month low, is seen as a key factor undermining the commodity-linked Loonie and supporting the USD/CAD pair. The uptick, meanwhile, seems relatively unaffected by some selling pressure around the US Dollar, which continues to be weighed down by bets for an interest rate cut by the Federal Reserve in September. On the Loonie front, the BoC is anticipated to cut rates again by 25 basis points to 4.5% as inflation eases. Traders have priced in nearly 93% odds of BoC rate cuts on Wednesday and a total of 75 basis points cut in borrowing costs this year.