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Market news: The United States approves a possible arms sale to Ukraine worth $310.5 million.Sources: The United States is preparing to impose new sanctions on Russia to increase pressure on Ukraine peace talks, including natural resources and banking entities. However, Trump has not yet signed the proposal to sanction Russia.Market news: The U.S. Food and Drug Administration (FDA) has requested the withdrawal of some recently fired employees who were responsible for renewal negotiations for the drug user fee program.The Dow Jones Industrial Average closed at 41,317.43 on May 2 (Friday), up 564.47 points, or 1.39%. The S&P 500 closed at 5,686.68 on May 2 (Friday), up 82.54 points, or 1.47%. The Nasdaq Composite closed at 17,977.73 on May 2 (Friday), up 266.99 points, or 1.51%.On May 3, according to the Wall Street Journal, the incoming Federal Reserve Vice Chairman of Supervision, Bowman, is seeking to reassess confidential ratings of the health of large banks. In a speech in February this year, she questioned the Feds recent regulatory ratings, saying that there was a "strange mismatch" between the Feds view of the financial condition of large banks and the unsatisfactory ratings given to many of them last year. According to people familiar with the matter, the Federal Reserve has not yet announced new regulatory ratings for U.S. banks with assets of $100 billion or more. Usually, the Federal Reserve will announce these ratings privately before the end of March. Some people familiar with the matter said that the Federal Reserve is planning to wait until the Senate confirms Bowmans new position. It is reported that the Federal Reserve has begun the process of determining next years ratings, and Bowman is expected to change the way the Federal Reserve calculates scores.

As Investors Anticipate a 25 Basis Point Fed Rate Hike, USD/CAD Corrects To Near 1.3700

Daniel Rogers

Mar 22, 2023 15:17

USD:CAD.png 

 

The USD/CAD pair is evidencing a corrective movement after failing to sustain a recovery above 1.3740 during the Asian session. Following a decline in Canada's inflation data, the Canadian dollar rebounded strongly from Monday's level of 1.3660. The falling Canadian Consumer Price Index (CPI) data confirmed that the Bank of Canada (BoC) could maintain its current policy stance.

 

Governor Tiff Macklem of the Bank of Canada maintains the status quo because he believes that the monetary policy is sufficiently restrictive to achieve price stability. However, BoC Macklem has left the door open for additional increases if the plan for reducing inflation fails.

 

Statistics Canada reported that the monthly inflation rate has increased by 0.4%, which is less than both the consensus estimate of 0.6% and the previous release of 0.5%. The headline CPI declined from 5.4% (consensus) and 5.8% to 5.2%. (previous release). The annual core CPI, which excludes the costs of fuel and food, decreased to 4.7% from 5.0%, but remained above the 4.4% forecast. The Bank of Canada, which has already increased interest rates to 4.5%, found the overall decline in inflation to be quite impressive.

 

In the interim, S&P500 futures are performing unfavorably after two days of intense buying. The odds favor the Federal Reserve increasing interest rates by 25 basis points (bps) for the second consecutive meeting. (Fed). As concerns of banking sector turmoil persist, the US Dollar Index (DXY) struggles to maintain its position above 103.20. In addition, analysts from UBS believe that tighter credit standards, economic contraction, and falling inflation could prompt the Fed to reduce interest rates this year.


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