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Reserve Bank of Australia Governor Bullock will hold a monetary policy press conference in ten minutes.June 16 – The 68th meeting of the Standing Committee of the 14th National Peoples Congress (NPC) was held on the morning of June 16 at the Great Hall of the People in Beijing. Chairman Zhao Leji presided over the meeting. The meeting decided that the 23rd session of the Standing Committee of the 14th NPC will be held in Beijing from June 23 to 26. The meeting recommended that the 23rd session of the Standing Committee of the 14th NPC deliberate on the State Councils proposals regarding the draft revisions to the Bidding and Tendering Law, the draft Financial Law, the draft revisions to the Law of the Peoples Bank of China, and the draft decision authorizing the Hong Kong Special Administrative Region to exercise jurisdiction over the Hong Kong side of the Huanggang Port and related extended areas.The yield on Japans 5-year government bonds rose 5 basis points to 1.915%.The Central Bank of Ukraine projects foreign aid of $53 billion this year, $42 billion in 2027, and $22 billion in 2028.On June 16th, Takashi Fujiwara, Chief Fund Manager at Resona Asset Management, stated that the Bank of Japans (BOJ) statement explicitly indicated that short- and medium-term real interest rates are negative. This could mean the BOJ does not want ultra-long-term bond yields to rise further. Simultaneously, this could also be a signal from the BOJ that if short- and medium-term interest rates remain low, businesses can easily raise funds and potentially expand into higher-risk sectors. The BOJ discussed the economy and prices side-by-side in its statement. This could indicate the BOJs willingness to raise interest rates further. Even if the opening of the Strait of Hormuz slows price increases, the BOJ can still use economic growth as justification for raising interest rates.

USD/CAD declines to 1.3500 on firmer Oil prices, BoC concerns over US inflation, and Fed Minutes

Daniel Rogers

Apr 10, 2023 14:35

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The USD/CAD maintains losses close to 1.3500, shattering a four-day winning trend, as traders brace for key Easter Monday data/events on major bourses. However, the recent decline in the Loonie-U.S. dollar exchange rate may be due to the increase in the price of WTI petroleum oil, Canada's primary export. In contrast to the recent increase in ardent Fed forecasts, the Bank of Canada's (BoC) dovish bias poses a challenge to pair sellers.

 

After increasing for three consecutive weeks, WTI crude oil prices gain 0.61 percent intraday near $80.00. Recent increases in the price of black gold may be due to geopolitical concerns surrounding China and Taiwan. In addition to the supply cut by OPEC+ and the faltering US dollar, the energy benchmark is sustained by the supply cut by OPEC+ and the weakening US dollar.

 

However, the US Dollar Index (DXY) has fallen for three consecutive weeks and is under pressure near 102,000.

 

Fears of higher Fed rates versus inaction from the Bank of Canada (BoC) grew after the upbeat US Jobs report versus the lack of significant positives in the March Canadian jobs report.

 

As a result, the CME's FedWatch Tool indicates a 69% chance of a 0.25 basis point rate hike in May, up from 55% prior to the US employment report.

 

Canada's headline Net Change in Employment increased to 34.7K in March from 21.8K in February, compared to the market consensus of 12K, while the Unemployment Rate came in at 5% versus the analysts' estimate of 5.0%. During the specified month, the Participation Rate decreased to 65.6% from the expected and previous rate of 65.7%. In addition, the average hourly wage fell 5.2% year-over-year in March, down from 5.5% in February.

 

In contrast, the US Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls (NFP) increased by 236K in March, the lowest increase since January 2021 (considering revisions), compared to the expected 240K and the previous 330,000. Additionally, the unemployment rate fell from 3.6% to 3.5%, while the labor force participation rate rose from 62.6% to 62.6%. The annual wage inflation rate decreased from 4.6% to 4.2%, below market expectations of 4.3%.

 

Futures on US equities ended higher, but yields remain under pressure ahead of the crucial BoC monetary policy meeting, US inflation, and Fed Minutes. Given the dovish concerns from the Bank of Canada (BoC) and the likely hawkish comments in the FOMC Minutes, the USD/CAD may see additional gains, barring any unexpected developments.


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